Is the NFT Frenzy Starting to Cool? OpenSea Trading Volume Drops Off Sharply

Is the NFT Frenzy Starting to Cool? OpenSea Trading Volume Drops Off Sharply

 Published: November 3rd, 2021

The NFT market took off in the second half of 2021, generating billions of dollars in monthly transaction volume from August onward. However, as new market data suggests slowing momentum, hunger for the new crypto asset class may now be on the wane.

Numbers from NFT marketplace OpenSea show that ethereum trading volume on the peer-to-peer platform dropped from USD 3.3 billion in August to just above USD 3 billion in September before dipping sharply to USD 2.63 billion in October, a 12 per cent rate of decline.

Given that the drop came after a spike in trading volume, from roughly USD 328 million in July to USD 3.3 billion by late August, it could simply mean demand is merely finding its level. The decline posted in October has also been smaller than the July to August rise.

Altogether, numbers from DappRadar show the broader NFT market leapt to USD 10.66 billion in Q3 trading volume. That’s a tremendous increase of more than 700 per cent from the second quarter. The analytics firm is still compiling its market-wide estimate for NFT trading volume in October. Still, the company did note a drop from more than USD 5 billion in August to a bit more than USD 4 billion in September.

In August, the burgeoning NFT market skyrocketed as popular collections like Bored Ape and Art Blocks soared. OpenSea reached a one-day record of close to USD 322 million in ETH transactions. In October, OpenSea’s best one-day total had dropped to USD 156 million in ETH volume.

That’s likely due to sales momentum slowing for some of the largest Ethereum NFT collections. Numbers from Cryptoslam show that the popular CryptoPunks collection went on a downslide from USD 678 million in August trading volume to about USD 217 million in September and then USD 156 million in October. Art Blocks fell from trading highs of close to USD 588 million in August to USD 242 million in September, declining even more sharply in October for just USD 93 million in trading volume.

Despite the inability of those prominent Ethereum NFT collections to sustain their August peaks, other collections and marketplaces experienced volume increases from September to October. New NFT projects, meanwhile, are launching on an almost weekly basis.

New NFT investment opportunities continue to arrive

Axie Infinity, the NFT-driven game that trades on the Ronin Ethereum sidechain, saw its revenues jump from USD 516 million in September to almost USD 545 million in October. The CrypToadz NFT avatar collection increased from USD 61 million in September trading volume in September to more than USD 85 million in October.

Over at the recently-launched SuperRare Artwork marketplace, October was the best month yet with about USD 36 million in Ethereum volume, up from roughly USD 24 million in September.

October also saw the launch of numerous ‘profile picture’ NFT projects that generated substantial secondary trading volumes, including MutantCats at nearly USD 50 million and controversy-prone MekaVerse at USD 148 million.

Outside the Ethereum ecosystem, there were other notable highlights. The WAX blockchain reached a new one-day record of over USD 10 million in trading volume in October, driven by popular games like Farming Tales and Farmers World. The Flow-based NBA Top Shot game doubled its trading volume in the same period, rising from USD 20 million in September to USD 40 million in October.

However, it's worth pointing out that NFT activity on Solana has also been down in the last week, despite surging investor interest in Solana’s SOL token.

Figures from specialist analysis firm Solanalysis showed USD 20.3 million in NFT trading volume on Solana during the last seven days, a 30 per cent week-to-week dip.

Markets went ape for NFTs in September

It may simply be that NFT markets are settling into a more stable period after yet another overheated spell in crypto markets.

Back in September, the Bored Ape Yacht Club collection quickly became an NFT sensation, attracting hundreds of millions worth of USD-denominated trading volume for its gallery of cartoon images.

Demand intensified to such a point that A-list auction house Sotheby’s got in on the action, running an auction of Bored Ape NFTs that pulled in bids as high as USD four million for a package of 100 images. At the time, it was seen as yet another example of traditional investment firms legitimising the crypto space.

The Sotheby’s sell-off was sponsored by Yuga Labs, creators of Bored Ape. They gathered 100 NFTs from their own vault, but altogether the complete list of Bored Apes NFTs now runs to more than 10,000 different images.

Sotheby’s said at the time that the auction aimed for total bids of up to USD 18 million. At one stage, a bid of USD 4.3 million was posted just hours after the auction kicked off.

Rising interest in NFTs has dominated crypto news in the past few months. However, the furore around Bored Ape pushed it to unforeseen levels. Even as the Sotheby’s sale began, the project posted a new record for a single-NFT sale, flogging off one Bored Ape for 600 ETH or about USD 2.1 million on OpenSea.

Celebrities like Snoop Dogg have been a key catalyst for the surging interest in NFTs. NBA star Steph Curry purchased a Bored Ape NFT in September for USD 170,000.

Bored Ape has raked in more than USD 500 million in trading volume since it launched in April. A sister project called Mutant Ape Yacht Club, meanwhile, has generated close to USD 260 million. A third offshoot called Bored Ape Kennel Club is closing in on the USD 100 million mark.

Out on the broader NFT market, trading volumes began to surge alongside the Bored Ape phenomenon, achieving record-breaking trading volumes each week from mid-August onward. OpenSea reported more than USD 3.4 billion in August trading volume, while Axie Infinity pulled in USD 840 million.

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