As Ethereum rises, the NFT market roars back to life

After a few months of quiet for NFTs, the market has re-ignited, with rising price floors and increased trading activity. Is it going to keep going?


In summary

  • In recent months, the NFT market has seen a rush of high-dollar sales, despite increased transaction volume.
  • Early in 2021, crypto collectibles sold as NFTs exploded, but enthusiasm has waned in subsequent months.

Following the spring surge, the market for crypto collectibles sold as NFTs dropped in recent months, but a recent flurry of high-dollar sales and startling levels of trade volume suggest that NFTs are regaining traction.

According to DappRadar, NFTs soared in popularity in early 2021, with $1.5 billion in trade volume in the first quarter alone—a 2,627 percent increase year over year. NFTs were introduced to the masses thanks to Dapper Labs' NBA Top Shot, CryptoPunks made seven figures, celebrities made millions, and corporations like Taco Bell and Charmin got on board. NFTs were selling like hotcakes, whether it was a still image, video clip, tweet, or any digital property tokenized on a blockchain.

The impetus, though, seemed to wane after that. NFTs were dubbed a fad by critics, and concerns about the environmental impact of Ethereum mining grew louder. Top Shot prices plummeted, and tying an NFT drop to a celebrity or athlete was no longer a guarantee of success. Despite this, transaction volumes for the first half of the year were $2.5 billion, indicating a drop in interest from the first quarter but still plenty of activity... albeit with less fanfare than before.

However, the rumor mill is now again churning. Take a look at some of the news stories from the past week: Gary Vaynerchuk, an investor and influencer, purchased a CryptoPunk for $3.7 million in Ethereum, and another sold for $5.4 million two hours later. Mila Kunis and Ashton Kutcher's animated online series Stoner Cats raised $8.3 million through the selling of NFTs (while generating a heap of failed transaction fees). The average price of a CryptoPunk increased by 53% in a week to $135,000, with one wallet owner spending more than $6 million for a hoard of them.

Today, NFT marketplace OpenSea put a cap on the previous week's activity by tweeting that it had handled $95 million in transactions in just two days, according to CEO Devin Finzer. OpenSea, on the other hand, had around $21 million in volume for the entire year of 2020. Over the weekend, the popular Bored Ape Yacht Club NFT collection on OpenSea reached a new top average price point, currently sitting at over 11 ETH (around $29,000).

Axie Infinity, a play-to-earn Ethereum game, has been putting up remarkable numbers in recent weeks. Axie has moved $875 million worth of NFTs in the previous 30 days, according to statistics from its Ronin sidechain marketplace, with around $197 million of that occurring in the last seven days.

Based on all of that NFT volume, Axie Infinity made more money in fees in a seven-day period last month than either the Bitcoin or Ethereum protocols—and the game's AXS native governance token has increased in value by more than 550 percent in the previous 30 days. According to the most recent data given by creator Sky Mavis earlier today, the #1 crypto game has over 900,000 daily active participants.

Axie's recent growth appeared to be unrelated to the wider NFT market trend until the last week or two. But today, despite rising volume elsewhere, climbing price floors for elite collections, and an increasing number of top-dollar transactions in the mix—all possibly fueled by the recent uptick in cryptocurrency prices—it appears that NFTs are once again a coveted commodity. It remains to be seen whether the current buzz will last in the long run.

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