Ether and NFTs diverge in crypto market
The crypto market has seen significant gains in the new year, with ether (ETH) and other cryptocurrencies experiencing a bull-market trend. However, non-fungible tokens (NFTs) have not seen the same level of growth, with valuations lagging behind.
ETH gains vs. NFT lag
While ether has surged by approximately 70% year-to-date, NFT valuations have failed to follow suit. The Nansen’s NFT-500 index, which measures the valuation of the top 500 NFTs, has dropped 50% when denominated in ether and 16% in dollar terms.
The Blue-Chip 10 index, which tracks the valuations of prominent NFTs like CryptoPunks and the Bored Ape Yacht Club, is down 44% in ether terms and 1.7% in dollars.
Decline in NFT marketplace
OpenSea, the largest NFT marketplace, has also experienced a decline in activity. In January 2022, the platform was clearing $387.48 million in fees and making $120.45 million in revenue every month. However, these figures have since plummeted to $6 million in fees and $1.39 million in revenue.
NFTs need utility and innovation
According to Nick Ruck, the COO of ContentFi, the stagnant growth in NFTs is due to the lack of technological innovation and utility. He believes that new innovations are needed to increase the use cases of NFTs and drive user interest.
New growth in the market
Despite the current challenges, there are signs of growth in the NFT market. There is a growing market of NFTs based on utility, such as those used for ticketing and loyalty programs.
Bitcoin ordinals and NFT rebound
Bitcoin ordinals, which continue to gain popularity, are attributed to the growing development of a layer-2 for the Bitcoin blockchain. This development is seen as a breakthrough for bitcoin utility and a hub that brings communities together.
David Mirzadeh, Ecosystem Finance Lead of Taiko, believes that this utility narrative is driving the potential rebound of NFTs. He sees NFTs recovering ground once they move beyond speculative assets and start offering real utility in areas such as games, music, and social interaction.
Conclusion
While the crypto market is experiencing positive momentum, NFTs have yet to benefit from the overall euphoria. The industry is seeking new technological developments and utility-driven applications to reignite growth and interest in the NFT space.
I have been writing about crypto for over two years. I have a vast amount of experience in the industry and my work has been featured on some of the biggest publications in the space.
