Are We Really in for a NFT Bull Run Or This Is Just A Mirage?
Many people in the NFT ecosystem were hammered and bruised by the bear market of 2022. Sales collapsed, notable players, quit, and consumer brands started to shudder at the idea of introducing their own non-fungible products. But it appears that a change may have been brought about by the new year. The NFT market has begun to trend upward as the new year has come around and it appears to be an NFT bull run. According to information from Cryptoslam, the volume of NFT sales on the international markets increased by 43% this month. Community attitude has improved significantly as a result of rising project floors, soaring coin prices, and the popularity of open editions. Of course, the NFT space is being advanced by a statistical upswing rather than just positivity, which is what is moving the needle in Web3.
However, before we declare this to be a fully-fledged bull market, there are a few elements that we need to take into account. Let’s examine the marketplace to discover what is actually happening and identify the projects or other factors that are responsible for this NFT bull run.
Is this a return of NFTs?
To start, let’s clarify one thing. NFTs never departed in the first place for the Web3 collectors, artists, and builders who have been constantly grinding over the past few years. Why? Because NFTs go much beyond just markets or money. They are cutting-edge technology with a wide range of applications. NFTs being defunct is akin to declaring virtual reality is dead. Although the markets may be in decline, technology is still very much in use today. But I digress.
NFT markets appeared to be largely dead to those who merely dabbled in Web3 or who are outside looking in, but suddenly they appear to be reviving. This time around, however, things are very different. In contrast to the NFT boom of 2021, the market has grown and is no longer as unruly as the wild west.
In the NFT space, million-dollar sales and exchanges occur much less frequently than they once did. This might, however, be for the best. The NFT community returned to its roots as public interest in NFTs, which was initially primarily driven by their financial potential, began to wane. Both artists and collectors had to reconsider their initial motivations for getting engaged with crypto-art in 2022.
It’s clear that Web3 has undergone significant change since the bear, and perhaps this most recent upswing is merely the market reflecting that change. Since November was the lowest month since June 2021 in terms of overall ETH NFT sales volume, according to the Dune analytics dashboard, OpenSea has recovered during January, hitting over $350 million in sales volume (with almost a full week still left in the month).
So why is OpenSea now announcing its first growth in ETH NFT sales volume since April 2022? Is this market revival a direct result of the recent rise in ETH’s price, or is there another factor at play? The solution might surprise you. Because we can clearly identify the forces at work in this most recent NFT pump, it might not happen. And ETH is where it all truly begins.
Why Are NFTs flowing?
In the big scheme of things, 1 ETH is equal to 1 ETH, as any respectable NFT collector will gladly admit. In other words, cryptocurrency and NFTs will always be valuable in some fashion, independent of coin values. Many people in the NFT field believe that the decentralised creative sector that is emerging on the blockchain shouldn’t be concerned about pricing. And as was already mentioned, Web3 is about more than just stacking currencies, even though ETH might be what keeps the strange, broad universe of NFTs turning.
However, these same collectors who are spitting values will also inform you that NFT prices shift as a result of changes in ETH pricing. It frequently goes one of two ways and represents the yin and yang of the blockchain.
Price drops for ETH in the first scenario. People start panicking and selling their NFTs as a result. This may result in brisk sales for a brief while, but if ETH doesn’t quickly recover or slides much lower, sales will stall. For reference, compare the monthly sales volume of OpenSea with the price of ETH. Even though ETH prices had decreased by 50% from the previous month, January 2022 was a record-breaking month for NFT sales and it initiated an NFT bull run. However, when the summer crash arrived, things were very different.
In scenario number two, ETH increases in price, which could result in a significant round of sales that revitalises the NFT market. This was a factor in the initial 2021 bull run estimate and could be occurring right now. But depending on who you talk to, NFTs may have caused ETH to pump or vice versa in the past. In any event, it’s crucial to keep in mind that these two hypotheses rely on the NFT trend history over the previous few years. In Web3, a lot has changed and is still evolving, so it’s unclear whether or not these patterns will be noticed.
Also, read – Pros And Cons Of NFT Investment For A New Investor
So, is an NFT bull run imminent?
However, a few particular projects are one of the key driving forces behind this present NFT pump, in addition to price action. Those working in the NFT sector who actively innovate, create or otherwise support the ecosystem’s self-sustainability appear to be making progress. Additionally, one of the most recent advents that are advancing them isn’t really an advent at all. Instead, the NFT sphere is bustling with the resurrection of Bored Apes and open editions (OE).
Open editions are a form of NFT release wherein designers leave the bookend off and permit collectors to mint as many copies as they choose — or cap it to a few per wallet and set a time limit for minting — rather than minting and selling a limited batch of identical NFTs. One of the most notable advocates for open-edition prosperity today is Jack Butcher, with his significant Checks initiative.
As a parody of social media verification, Butcher’s OE first sold over 16,000 versions for eight dollars apiece. Following the OE’s closure, Butcher began experimenting with novel burn dynamics that would increase value for those who had minted. Parallel to his work, the NFT space did its thing by bringing a large number of derivatives to the market. Then the craze took off, and many designers made the decision to start their own, comparable businesses, using Manifold’s services to make it happen.
The Nyan Balloon Color Change Station will be opening for a limited time, January 23-January 28th. You’ll have a chance to exchange your Nyan Balloon for a different color every day🎈
— ☆Chris☆ (@PRguitarman) January 22, 2023
Numerous producers, both large and little, launched OE projects in January in the NFT arena, and the numbers are constantly rising. However, while ETH pumping and open editions have been two characteristics of this most recent NFT increase, the recently announced Bored Ape Sewer Pass has been openly carrying the entire ecosystem.
Sewer Pass NFTs became claimable in mid-January as part of an ongoing campaign centred around a new narrative arc dubbed The Trial of Jimmy the Monkey. This coincided with the release of the competitive skill game Dookey Dash, which generated over $20 million in secondary sales volume. It’s no surprise that NFTs are booming at the same time as yet another ground-breaking Bored Ape project given the sway that Yuga and BAYC have had over the NFT ecology for almost two years now.
Defy isn’t part of an “OE meta” it’s the start of a movement in digital art and our collective futures.
Proceed w/ Caution. pic.twitter.com/uk37RimD9d
— Lucréce (@DesLucrece) January 24, 2023
What can the NFT space anticipate from the combination of an ETH pump, an OE resurgence, and Web3 brand ambitions beyond BAYC? The NFT space may very likely return to being challenging as 2023 Q1 progresses and tax season draws closer. However, this trend of growing costs and escalating feelings appears certain to continue soon.