Momentum Building for Resurgence of NFTs

After a gold-rush-style boom in 2021, the NFT market looked like a bust in June last year when sales dropped from a January high of $12.6 billion to $1 billion. For six months after that, sales bottomed. However, NFTs are bouncing back.

Trading volume in January 2023 was $946 million on sales of 9.5 million, according to Dapp Radar. Those figures mark percentage increases of 38 and 42 percent respectively since December.

What is Moving NFTs

The recent surge in NFT activity has been led by several events.

Blur, which launched in October, has been challenging the perennial NFT marketplace leader OpenSeas.

After building volume for several months, Blur airdropped “care packages” to users in the middle of last month that could be redeemed for tokens. That added to Blur’s trade volume. In fact, Blur’s trade volume has outpaced OpenSeas’ so far this year. Last week it stood at 79.8 percent of NFTs traded, according to Dune. However, OpenSeas still boasts a higher number of traders on its platform.

Also contributing to the upswing in NFT activity was the release of new collections by some of the biggest names in the business, including Yuga Labs, Doodles, and Moonbirds.

Sweeping NFTs

A major factor in Blur’s stunning growth is its incentive for buyers to flip NFTs. As a result, NFT day traders are flocking to the marketplace.

Those day traders employ a strategy known as “sweeping the floor”. That entails buying NFTs in volume from a single collection in hopes of finding a few diamonds in the rough. Like day trading stocks, sweeping the floor is not for novices.

What is an NFT

If you are not actively involved with the NFT market, you may think of Non-Fungible Tokens as artworks pre-teens use to become millionaires. However, NFTs are more of a digital record of ownership, similar to a receipt or deed.

Each NFT has its own identification code that is stored on a blockchain. That code is linked to an item to provide proof of ownership. As a result, NFTs can be easily bought, sold, and traded.

Digital products, such as artwork, videos, songs, and avatars are the most popular NFTs. However, almost anything can be linked to NFTs. That includes physical assets, such as vehicles and event tickets.

The Non-Fungible Part

It might be good to stop here and briefly distinguish fungible from non-fungible assets.

If you were told that you are non-fungible, you might breathe a sigh of relief believing you are not infected with a horrible disease. However, it would actually mean that you are unique and can not be replaced. The same holds true of NFTs.

By contrast, cryptocurrencies, which are used to purchase NFTs, are fungible. It is the same with any currency. For example, all current one-dollar bills are the same. If you lose one, it can be replaced with another just like it.

Spotify Using NFTs

One of the promising aspects of NFTs is their expanding use beyond the collectibles market.

The music streaming service Spotify is testing the use of NFTs. The trial version was recently rolled out to Android users in the U. S., UK, Germany, Australia, and New Zealand.

The program, dubbed “token-enabled playlists”, allows NFT owners to connect their wallets to listen to curated music. The test is planned to run for three months.

Playing to Win – NFTs

As mentioned above, big names in NFT gaming recently launched new products.

NFT games give players the opportunity to earn tokens as they play. This mix of gaming and making money is known as GameFi.

Gamers can collect tokens to hold for appreciation or sell to other gamers or collectors.

Bright Spot

Blockchain-related sectors have hit a rough patch recently, but the resurgence of NFTs counters that trend.

Dapp (decentralized applications) use blockchain technology to keep user information private. Although user specifics are unavailable, Dapp activity can be measured by tracking daily Unique Activity Wallets (dUAW) usage.

In January, dUAW use dropped for both DeFi (9.3 percent) and gaming (.89 percent) sectors from the month before. However, NFTs defied that trend.

“The most promising sector in January was the NFT market,” reports DappRadar, “which had a growth of 24.56% from the previous month, reaching 146,516 dUAW.”

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Max Erkiletian

Max K. Erkiletian began writing for newspapers while still in high school. He went on to become an award-winning journalist and co-founder of the print magazine Free Bird. He has written for a wide range of regional and national publications as well as many on-line publications. That has afforded him the opportunity to interview a variety of prominent figures from former Chairman of the Federal Reserve Bank Paul Volker to Blues musicians Muddy Waters and B. B. King. Max lives in Springfield, MO with his wife Karen and their cat – Pudge. He spends as much time as possible with his kids, grandchildren, and great-grandchildren.