In January, the NFTs market had one of its finest months yet, with a record trading volume of $6 billion, while cryptocurrencies such as Bitcoin and Ether plummeted due to investors’ fear of the Federal Reserve (FED) tightening.
The NFT Space Doesn’t End There
Ether experienced its worst month in two years, dropping 55% from its all-time high (ATH) of $4,812. According to Bloomberg, the coin’s lone all-time high on Wednesday was a 40-day correlation coefficient of 0.65 – the top is 1– with the S&P 500. This suggests that Ether may face additional challenges as macroeconomics evolve.
NFT traders, on the other hand, did not share the same apprehension. In fact, trade volume in the non-fungible token market reached a new high of approximately $6 billion in January.
The NFT avatar projects are proving to be quite profitable, thanks to the overwhelming support of collectors, communities, and celebrities. According to OpenSea, the popular Bored Ape Yacht Club now has a floor price of 99.0 ETH and a trading volume of 82,076,32 ETH in the previous 30 days.
Azuki, another avatar project, is currently the #1 collection on OpenSea, ranked by volume, floor price, and other statistics. Its floor price is 10.9 ETH, and it has surpassed the trading volume of the Bored Ape Yacht Club with 92,241.73 ETH in the last 30 days.
Aside from avatars, non-fungible tokens (NFTs) saw some creators become millionaires overnight in January when their NFTs went viral, such as a young student from Indonesia (Ghozali Everyday) who minted his selfies and became an OpenSea and social media sensation; and a Chinese entrepreneur (IreneDAO) who won the hearts and dollars of the crypto community, reporting a total volume of 2,367.1283 ETH traded in less than
Every time these occurrences make headlines, the excitement and interest of many individuals grow. They used to fantasize about Hollywood; now, they fantasize about NFTs.
However, celebrities, musicians, athletes, major brands, and organizations continue to invest in the NFT industry, predicting significant profits in the future.
Furthermore, OpenSea’s competitor LooksRare claimed $2.25 billion in trading volumes at the end of the month, which was 50% of OpenSea’s. The LooksRare strategy of sharing earnings with traders, on the other hand, has been dubbed unsustainable. Some believe that high trading volumes are the result of ‘wash trading,’ a type of price manipulation in which traders buy and sell assets to raise prices.
But why do NFTs continue to soar?
When the price of Ether fell substantially last month, NFT traders recognized it as an investment opportunity, demonstrating an inverse relationship between non-fungible tokens and crypto-assets. Similarly, most NFT holders prefer not to sell at a loss.
The NFT environment is characterized by a high level of emotion, bragging, and fees, which may discourage investors from selling. Because non-fungible tokens trade more like art than stocks, choices are not made in the same way.
In a recent interview with The Block, FTX creator Sam Bankman-Fried revealed that he was astonished by the NFT market’s performance in January. “The fact that they’re non-fungible makes them less liquid,” he said, adding, “the whole psychology is also extremely interesting.”
And “psychology” might be a good word for it. These holders typically want to be able to brag about the NFTs they own, and with Twitter and Reddit’s new avatar capabilities, bragging is more than encouraged.