Monday, June 5

NFT Market Rises Even as Cryptocurrencies Melt | Bitcoin Portal

While Bitcoin (BTC), ether (ETH) and many other major cryptocurrencies are rallying, it has been a rough start to the year for the crypto market in 2022.

In the first two weeks of the year, bitcoin plummeted 16%, ethereum 20% and Solana 27%. Now prices appear to be more stable, but even so, for some, it is a possible sign that a crypto winter is to come.

But you wouldn’t know that when looking at the non-fungible token (or NFT) market. Digital collectibles have been skyrocketing in recent weeks as leading NFT marketplace OpenSea has already recorded $2.29 billion volume traded this year.

OpenSea’s monthly record was over $3.4 billion in August 2021. At this rate, January could break that record.

Over the past year, as the NFT market has rapidly expanded and matured, we have seen it run in parallel with the cryptocurrency market.

When crypto prices plummeted in May 2021 and stayed that way for the remainder of the second quarter, the NFTs’ dynamism appeared to be stagnant. Subsequently, when crypto prices rebounded, the NFT market simply exploded.

But this time, the NFT market not only maintained the level of dynamism that started in December, it also shot up to even higher highs.

While OpenSea does not reflect the entire NFT market (and has new opponents, including LooksRare), provides a good indication of the current level of trading action and interest in the sector.

Dragos Dunica, co-founder and data director of the blockchain analytics platform DappRadar, told the Decrypt who believes that some cryptocurrency holders are taking advantage of the apparent and growing staying power of large NFT collections amid the depressed crypto market.

“NFTs continue to perform very well, not necessarily ‘despite’ falling crypto prices but undoubtedly and in part because of this,” he said.

“Investors are getting a discount for the better-known digital asset class (at least in fiat terms) and as NFTs maintain their uptrend, that discount could, in turn, turn into a nice return on investment as crypto prices too. start to rise.”

While some NFT collections lost their dollar value as the price of ether plummeted, others rose. Popular NFT projects such as the Bored Ape Yacht Club and Doodles are only now rising.

Both have undergone a huge recent increase in their respective minimum prices in ether, or the cheapest NFT listed on a market, keeping a better pace with its dollar pricing rather than following the recent downtrend of the cryptocurrency market.

Dunica highlighted external factors that may be bringing crypto prices down recently, including the US Federal Reserve’s plans to raise interest rates, as well as violence and protests in Kazakhstan, a key bitcoin mining country.

On the other hand, although complaints about the environmental impact persist and the reaction of the gaming community grows, NFTs are booming more than ever.

DappRadar reports that there was an NFT trading volume of $23 billion in 2021 (compared to $100 million in 2020) while Dunica cites the heyday of blockchain gaming, the hype surrounding the metaverse, and the growing interest in celebrities.

“All these are signs that the NFT market is evolving and rapidly progressing towards its peak, making it an attractive investment possibility, regardless of how crypto prices are currently,” Dunica said.

While this may be the most obvious case of a divergence between the crypto and NFT markets, data from the blockchain analytics firm Nansen highlight smaller swings in the past year.

A Nansen chart comparing the price of ETH to the trading volume of NFTs built on Ethereum (Image: Nansen)

As major NFT collectors increasingly prove their staying power, it could be an opportunity for investors to shift their crypto allocations to another tokenized asset with more stable holding power.

It’s still a possible gamble, as the NFT market is known for its periodic volatility as is the crypto market, but now, some large collections are acting as a store of value (just like traditional art).

Either way, this current divergence between NFT trading action and crypto prices could prove to be a brief blip on the radar.

As suggested by Paul Harwood, product manager at Nansen, the price of ether and the NFT market are both at their peak when looking at a longer timeline.

“Recently, the sales volume of NFTs has grown as the price of ether has dropped. In this context, high-performing NFTs may be desirable as they are better positioned to outperform the underlying cryptocurrency used in trading.” Decrypt.

“Despite this recent activity, the long-term price of ether and activity in the NFT market continues to be on an upward trend.”

*Translated and edited by Daniela Pereira do Nascimento with permission from