A controversial article from the Wall Street Journal came out yesterday claiming that “NFT Sales are collapsing,” citing primarily data from NonFungible. Let’s take a look at what the article claims, and provide some clarifications and corrections.
Jack’s First Tweet isn’t Worth Millions of Dollars
This one isn’t very surprising to me, and has been widely reported across the mainstream media. At the peak of the NFT boom in March, 2021, Sina Estavi paid $2.9 million for a NFT version of Twitter Co-Founder Jack Dorsey’s first tweet. Unsurprisingly, at least to me, that tweet didn’t fetch the $50 million he was seeking in an auction on OpenSea that recently ended. The highest offer at press time was around $30,000. Even Mr. Estavi said failure of the auction wasn’t a sign that the market is deteriorating, but somehow that is seemingly offered up as evidence.
The number of active wallets in the NFT market fell 88% to about 14,000 last week from a high of 119,000 in November.
This is a flat out wrong. NonFungible was the primary data source for this article, and the NonFungible index doesn’t include many blockchains other than Ethereum, there’s many others such as Flow, Solana, or Palm. For example, in March 2022 NBA Top Shot (on the Flow blockchain) alone had ~38,000 unique buyers and over a million transactions.
In addition to the NonFungible data not including many blockchains, this Dune Analytics dashboard pretty clearly shows that wallets haven’t dropped anything close to 88%, maybe 10-20% or so since the peak in January/February of 2022:
OpenSea volume is clearly on an uptrend, and has been for a long time:
The Time Period Covered by the NonFungible Report was Q1 2022
As you may have heard, this past Saturday alone, Otherside from Yuga Labs sold almost $300 million in NFTs, which is likely the largest set of NFT sales ever. Even if the rest of the above data doesn’t convince you that the NFT market isn’t collapsing, that sale just a few days ago provides direct evidence to the contrary.
What Actually is Happening?
I think we might be headed for a period of consolidation. There’s too many Ethereum collections, and many more continue to launch. The money appears to be flowing to a few high-quality collections. Personally I feel that this is not where the value in the ecosystem is going to be created on a reliable basis.
I don’t know exactly where the value will be created, but broader consumer adoption is not going to come from MetaMask wallets and the like. That’s way too confusing, and filled with hacks and scams, for your general consumer. Stay on the lookout for interesting and unique, high-quality projects!
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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.
Founder of NFT Labs, building tools for collectors, creators, and speculators.
