It’s rocking on the NFT market (non-fungible tokens, “non-fungible tokens”), these digital property certificates registered in the blockchain (a technology for storing and transmitting information based on cryptography) and which, for the past year, have been panicking the counters. According to a report published on May 5 by the monitoring platform Chainalysis, the craze for these tokens shows a severe decline in the first quarter of 2022. In the wake of the record of 69 million dollars (65.4 billion euros) for the sale of an NFT by the artist Beeple in March 2021, the volume of transactions had exploded, briskly crossing the 40 billion dollar mark over the whole year.
According to data from the insurer Hiscox, the three main auction houses, Sotheby’s, Christie’s and Phillips, which had never ventured into this field, had then sold for 185 million dollars of NFT. But this growth is irregular and fluctuates drastically from month to month. Chainalysis thus saw a peak in activity in August 2021, coinciding with the release of the collection of NFT Mutant Ape Yacht Club from the start-up Yuga Labs. At the end of January, transactions rebounded again after the launch of the LooksRare platform.
Since then, however, the market has experienced a serious downturn. In one month, between February and March, the volume of expenditure fell from 3.9 billion to 964 million dollars. For Ethan McMahon, economist at Chainalysis, “NFT’s trading slump in Q1 2022 coincided with the tumble in broader cryptocurrency markets.” In his eyes, however, “People’s interest waxes and wanes independently of cryptocurrencies, which is also the strength of this market.”
“Towards a Bubble”
This volatility does not worry the specialists. According to Chainalysis, NFT buyers have already spent over $37 billion so far this year. And the market revived in mid-April, when Yuga Labs, to which we also owe the Bored Ape Yacht Club collection, put on sale virtual plots of land from its next metaverse project (virtual world), called Other side. The potential is such that the NFT SuperRare platform will open a very physical gallery in New York on May 19 to expand its community and convince the last recalcitrants.
The Chainalysis study also reveals that this asset class attracts buyers from all over the world, with Central and South Asia leading the way, followed by North America and Europe. Their motivations couldn’t be clearer: a taste for investment rather than a passion for art. According to a survey published by Hiscox on April 25, ROI remains the top driver for more than 80% of NFT buyers. Barely a quarter of them, mostly women, say they look for crypto-arts that they like.
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