Non-fungible tokens (NFTs) saw explosive growth in 2021, but this growth hasn’t been consistent and has leveled off so far in 2022, according to Blockchain data platform Chainalysis.
NFTs are blockchain-based digital items whose units are designed to be unique, unlike traditional cryptocurrencies whose units are meant to be interchangeable.
The report explores how the NFT market has grown and contracted since the beginning of 2021.
NFT activity ebbs and flows month to month — in 2022 thus far, the value sent to NFT marketplaces continued its 2021 growth in January, entered a downturn in February, and then began to recover in mid-April likely due to the recent launch of Bored Ape Yacht Club’s metaverse project.
Overall, collectors have sent over $37 billion to NFT marketplaces in 2022 as of May 1, putting them on pace to beat the total of $40 billion sent in 2021.
According to the findings, the spike was likely driven by the release of the Mutant Ape Yacht Club collection, and one stretching from late January to early February of 2022, which was likely driven by the launch of the LooksRare NFT marketplace.
After that spike though, NFT transaction activity declined significantly beginning in mid-February, dropping from $3.9 billion the week of February 13 to $964 million the week of March 13 — the lowest weekly level since the week of August 1, 2021.
The analysis reveals that despite these fluctuations in transaction volume, the number of active NFT buyers and sellers continues to grow.
In Q1 2022, 950,000 unique addresses bought or sold an NFT, up from 627,000 in Q4 2020. Overall, the number of active NFT buyers and sellers has increased every quarter since Q2 2020. In Q2 2022 as of May 1, 491,000 addresses have transacted with NFTs, putting the NFT market on pace to continue its quarterly growth trend in the number of participants.
The number of active NFT collections on OpenSea — meaning those with any transaction activity in a given week — has also grown consistently since March 2021, and currently sits above 4,000.
According to the study, the vast majority of NFT transactions are at the retail size, meaning below $10,000 worth of cryptocurrency. NFT collector-sized transactions (between $10K and $100K) grew significantly as a share of all transfers between January and September of 2021, but since then have stayed flat. This suggests that, for the time being, the addition of new retail NFT investors is keeping pace with the addition of bigger NFT investors.
