The decline that the crypto market suffered in the second quarter seemed to have cast a shadow on Non-Fungible Tokens, mostly referred to as NFTs. Data show that the interest in digital collectibles or NFT waned off in the second quarter of this year, compared to the first and the same period from the previous year.
According to data from The Block Research, NFTs had a total trading volume of $12.22 billion in the second quarter of 2022. In the first quarter, the figure stood at $33.88 billion, translating to a decline of 63.93 percent.
This year has been a tough one for the general digital assets markets. Compared to other sectors, the decline experienced by the NFT sector in the second quarter raises the most alarm. The cryptocurrencies and NFT markets have suffered some setbacks induced by loss in interest by investors, market trends, etc. The performances of both markets were affected by heavy pressure from macroeconomic trends and the fallout from the Terra debacle.
The second quarter had numerous highlights but some of the notable ones include; the top 20 cryptocurrencies on the basis of market capitalization saw their value decline by at least 30 percent. DeFi Total Value Locked (TVL) declined by 68.13 percent or $155.79 billion in Q2 of 2022, and decentralized exchange (DEX) trading volume decreased by 38.6% compared to the first quarter.
In the second quarter, June saw the most decline in NFT trading volume, recording transactions of just a little above a billion dollars. This data shows a worrying decline in NFTs. June had the lowest trading volume since July 2021.
NFT platform OpeanSea accounted for most of the trading volume recorded in the second quarter. It accounted for $6.79 billion of the total volume recorded in the second quarter, thus representing 55.54% of the total volume of transactions seen. NFT marketplaces LooksRare and Magic Eden followed behind as second and third accounting for $4.58 billion or 37.52 percent and $707 million or 5.79 percent respectively. Together, OpenSea and LookRare accounted for about 93 percent of trading volume for the second quarter of 2022.
Unlike June, the month of April accounted for most of the trading volume seen in the quarter. April accounted for $7.8 billion or 59 percent of the trading volume for the quarter. A total trading volume of $46.1 billion was recorded during the first quarter of the year. Compared to the first quarter of 2021 which saw a trading volume of $953 million, NFTs have done well for the year and trading volume is over 4,700 percent. Compared to 2021’s second half which had a trading volume of $14.91 billion, trading volume for the first half of 2022 is up more than 200 percent.
Although the market has seen some setbacks, the first quarter of 2022 is still the best performing quarter for NFTs with a trading volume of $33.88 billion. “Overall trading volume and sales volume have grown by 533% and 59%, respectively, since Q2 of 2021. Although OpenSea is the leading NFT trading platform, its share declined with the emergence of marketplaces such as LooksRare, x2y2, and Solana’s Magic Eden,” a report by DappRadar reads.
“The decline in trading can be attributed to a decline in the market cap of cryptocurrencies and increased competition in the NFT trading landscape. However, market volumes measured in USD have fallen by almost 70% since May, The volume in ETH has decreased by 55% over the same time span,” DappRadar added.
DappRadar also opined that the NFT market reacted uniquely to a bearish trend, suggesting that the NFT market capitalization in terms of Ethereum has been steadily increasing. “It rose from a low of 3 million ETH in October to its peak in April, reaching 6 million ETH. Currently, the market cap is over 5 million ETH, a decline of 8% from April but 20% since May % increase.” The price of Ethereum has, however, declined by about 68 percent since October.
Trading volume for the ETH-based Metaverse NFT collection has increased by 101%, while the Polygon collection has unfortunately declined by 26%. Overall, it has registered an increase of 96 percent. Year-on-year, the statistics look even more impressive as Ethereum-based collections have grown by 2093%, while Polygon is up 456%, with an overall increase of 1999%.
Blockchain games have been quite resistant to turbulence but game-based NFTs cannot say the same. Trading volume is down 82% overall, with most of the chain facing a pullback, the worst of which is 84% on Ronin and 88% on Ethereum. The decline in the Ronin series has resulted from a hack that netted more than $600 million.