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Non-Fungible tokens, or NFTs, have been one of the biggest and most dominant trends in the crypto industry ever since they went big in early 2021. However, after the bear market hit last November, their popularity has been brought into question. Now, the crypto winter has been pushing prices consistently for nearly a full year and it seems like the NFT sector is feeling the consequences, as well.
At least, this is what DappRadar analyst Sara Gherghelas reported recently, stating that NFT financials have been falling in Q3 2022. The good news, according to the analyst, is that the on-chain metrics are still bullish for the time being.
In a more detailed thread on Twitter, Gherghelas noted that by the end of Q1 of this year, NFTs had seen a trading volume of $12 billion, with 28 million sales in total. However, as the year progressed, the bear market led to a number of incidents that directly impacted the crypto world, and in extent — NFTs.
By the end of Q1’22, #NFT trading volume reached $12B with 28 million sales. In Q2, when the #Terra ecosystem collapsed and #CeFi liquidated, the #NFT market's trading volume declined 33% ($8B) and sales count dropped 29% (20.23M)
— DappRadar (@DappRadar) October 1, 2022
One of the biggest ones was the collapse of the Terra ecosystem, followed by CeFi liquidations. The NFT market suffered the consequences of these events as well, including a 33% ($8 billion) decline in trading volume, while the sales count crashed by 29%. But, it did not end there. As the second quarter ended, the events that took place during this time were so severe that their consequences continued to echo throughout the crypto world, impacting Q3, as well.
Due to high economic uncertainty that these events have caused, the NFT trade volume in Q3 ended up being 75% lower, with only $2.5 billion created. On the plus side, the on-chain measures, such as sales count and expanding adoption in the billionaire sectors, still show a steady demand, and Q3 has actually seen a 6% increase in sales, compared to the previous quarter.
Data shows that there were over 2.2 million unique traders in Q3, which is a 36% increase over compared to Q3 2021.
Despite a substantial fall in #NFT trading volume, in this quarter there were more than 2.2 million unique traders. It's up 36% over last year's third quarter. pic.twitter.com/2sJ36xnWiI
— DappRadar (@DappRadar) October 1, 2022
So, what does this mean for the future of NFTs? Right now, it is too early to tell. There is a possibility that NFTs will become an asset class used for value storing, similarly to art. Collectibles are highly dominant in the sector, with more than 50% being represented by avatars. NFTs are the most represented in collections, as pretty much everything except for virtual land parcels, metaverse projects, and 1/1 art is classified as collectibles.
That doesn’t mean that collections were left untouched by the market situation, of course. Q3 has seen an 88% decrease in the top 11 blue chips collections, which is a situation similar to Q2 2021, when the market also saw a considerable crash. But, another positive thing here, according to the analyst, is that the average holding days of the top blue chip collections indicate that traders don’t use NFT collections for short-term profit.
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Ali is a freelance writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profile investment sites including CCN, Capital.com, Bitcoinist, and NewsBTC.
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