Ether, and crypto in general, have seen gains of more than 10% since the start of the year, while NFT prices have lagged.
Stakeholders and analysts say utilities and technology development are needed to achieve growth
Crypto is approaching bull market territory, but non-fungible tokens (NFTs) have failed to benefit from the market euphoria.
While ether (ETH) is up about 70% this year, NFT valuations are not following suit. Nansen’s NFT-500 index, which measures the valuation of the top 500 NFTs, is down 50% this year when measured in ether, and 16% in dollars.
The Blue-Chip 10 index, which measures the valuations of the most prominent NFTs such as CryptoPunks and Bored Ape Yacht Club, is down 44% in ether terms, and 1.7% in dollar terms.
OpenSea, the largest NFT marketplace, hasn’t fared much better. At the height of NFT mania in January 2022, the platform was making $387.48 million in fees and $120.45 million in revenue every month, according to data from DeFiLlama. Now fees have dropped to $6 million per month and revenues to $1.39 million.
“NFTs have survived their first market cycle and have yet to reach a new technology leap point to capture more user interest, like DeFi had with Uniswap’s AMM,” said Nick Ruck, the COO of ContentFi, a decentralized, IP-focused content financial services company. service provider. ecosystem, said in an email interview. “Many new innovations are still being built to expand the use cases of NFTs, but this is also partly due to the fact that NFT prices are generally negatively correlated with the USD price of ether.”
However, there are some signs of growth in the market, including a growing market of NFTs that are utility-based rather than monkey JPEGs, with the technology being applied to things like ticketing and loyalty programs.
Bitcoin ordinal numbers also continue to grow in popularity, with miners appreciating the cost. Jason Fang of Sora Ventures attributed their success to being a hub for the growing development of something akin to a layer-2 for the Bitcoin blockchain.
“Bitcoin ordinal numbers are not only a breakthrough for bitcoin’s utility, but also a hub that brings communities together,” he said in an email interview. “Communities like Stacks, BSV, Rootstock and even Starkware, which don’t normally communicate with each other, are all exploring ways to get involved and build on the Ordinals Protocol – everyone has found common ground and wants a piece of it. ”
David Mirzadeh, Taiko’s Ecosystem Finance Lead, says this tool is also driving the NFT recovery.
“I see NFTs regaining some of the ground they lost once they move beyond just speculative JPEGs into utility assets in areas like gaming, music and social media,” he said. “Until then, their price performance will largely depend on speculative JPEGs, hype and mania.”
