The NFT market has been on a rollercoaster ride for the past few years. From its peak in the first quarter of 2022 to its decline in the second half of that same year, critics have declared NFTs dead. However, recent data from Nansen Research shows that the market is finally making mends after a steep decline beginning in June 2022. The report, published on June 5th, shows that a remarkable 67% of freshly minted Ethereum NFTs are profitable, thanks to their floor prices remaining higher than the initial launch price. This presents a positive return on investment for NFT collectors and curators alike.
Although the profitability of newly-minted Ethereum NFTs is on the rise, there has been a considerable downturn in newly-minted NFTs since the summer of 2022. This likely contributed to the profitability rates found in the report. To be more precise, Nansen Research revealed on Twitter that new NFT mints have been on a decline since the summer, with NFTs minted in May being 65% lower than those in April. Additionally, the chart indicates that NFT profits are usually higher in the first few days of minting, gradually decreasing as time passes.
Despite the slump in recent NFT mints, non-fungible Ethereum collectibles continue to prevail in the industry, generating around $139 million in transaction volume last month, according to Dune Analytics data. The data also suggests that the NFT market has witnessed significant growth since the start of 2022, surpassing its decline in the second half of that year.
One significant point to note is that a considerable percentage of trading volume throughout the market peak in the first quarter of 2022 is attributed to wash trading activity. This activity occurs when a trader buys and sells the same asset simultaneously to create the illusion of genuine market activity. For more information regarding this issue, check out “The Highs and Lows of a Tumultuous Year.”
Another notable spike in the NFT world occurred in February 2023, attributed to the launch of the Ordinals protocol, also known as Bitcoin NFTs. This launch generated renewed interest among collectors and investors, leading to increased buying, selling, and trading of NFTs on the Bitcoin network for the first time.
Despite the turbulent journey the NFT market has undergone throughout the years, Nansen’s recent findings indicate there is still hope for profitability. As new NFT mints decline, the market may undergo a period of recalibration and consolidation. However, the industry’s ability and resilience to rebound in the face of challenges demonstrate how NFTs remain valuable.
In conclusion, the NFT market is not dead, and it has experienced significant growth and decline throughout the years. While recent data indicates there is still hope for profitability, the market may need to undergo recalibration and consolidation. Nonetheless, the resilience of the industry and its ability to rebound from challenges showcases how valuable NFTs remain. Therefore, it is necessary for individuals to research any product fully before investing in it.
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