2022 state of the NFT market: Slowing growth and growing criticism
The crypto and mainstream world are heavily divided on NFTs — with their bad rep for scams and cash grabs by companies and influencers.
On social media, it’s hard to tell what’s a paid promotion and what isn’t — and users are angry over companies rushing into NFTs.
- Several gaming companies attempted implementing NFTs — with many plans pulled back after receiving heavy community backlash.
- Actor Brie Larson is under heavy criticism from fans for endorsing NFTs.
Crypto’s most influential person isn’t a fan
Even Vitalik Buterin — an Ethereum co-founder and key figure in the crypto industry — isn’t a fan of NFTs. In a Times interview, he expressed concerns with the direction of crypto.
- His concerns: The dangers of “overeager investors”, high transaction fees and “shameless displays of wealth”.
- “The peril is you have these $3 million monkeys and it becomes a different kind of gambling”.
But it’s hard to ignore the growth of NFTs — which contributed to the massive surge in Ethereum’s price in 2021.
- Many of the largest NFT collections trade on Ethereum’s network — and pay transaction fees with Ethereum.
- Meaning: The more NFTs are traded, the higher the Ethereum demand.
Investors: Have we reached peak NFT?
NFT transaction volume peaked in January and steadily declined (per Dune Analytics data).
- NFT Google search volume fell nearly a third in the past few months — and OpenSea’s trading volume is down 65% since Feb. 1 (per Defiant).
- The launch of ApeCoin and Yuga Lab’s announcement ignited growth in several NFT collections — but it’s not clear how long the hype will last.
The token price of LooksRare ($LOOKS) — the second-largest NFT marketplace — fell 73% from its peak in January alongside its trading volume.
But it’s too early to call the peak as trading volumes also fell sharply in late 2021 — before setting new highs in January. The NFT community shouldn’t be underestimated.
In crypto, money flows fast — and crypto traders are constantly chasing the next shiny thing (crypto lingo: metagame).
Stay open-minded: Profile pictures of monkeys are only one use case for NFTs. There are lots of innovations with NFTs and gaming, real-world assets and music — which we’ll explore in future issues.