NFT market a ‘game for pros’ in 2023 as volume declines

The NFT market is experiencing a contraction in 2023, with daily trading volumes falling significantly compared to previous highs, according to a recent NFT report by Galaxy.

Ethereum’s price performance has outpaced NFT projects, causing a breakdown of their longstanding positive correlation. Despite this, NFT activity remains higher than the 12-month lows in November 2022, with daily trading volume declining each month in 2023.

NFT marketplaces

Within the NFT marketplace sector, Blur has seen its trading volume dominance reach an all-time high of 80%, fueled mainly by airdrop farmers aiming to benefit from its season 2 token airdrop. “The top 1% of Blur traders account for 64% of the platform’s volume,” compared to only 20% on OpenSea.

OpenSea, which caters more to the retail collector market, has moved to lure professional traders with a pro trading platform and reduced fees, resulting in a consequent uptick in trading volumes to 23.7% (+52%), while Blur’s decreased 15%.

It is a bold move for OpenSea to compete for professional traders’ attention as whale activity on Blur has skewed its user base towards professionals, as the top 1% of users account for approximately 64% of platform trading volume. Meanwhile, short-term NFT marketplace sentiment is downplayed by declining floor prices for top-tier blue chip projects as collectors de-risk their investments in response to the contracting market.

NFT royalties

The report posits that “NFT royalties are becoming less relevant” as the market turns bearish, leading creators to seek new income strategies.

Royalty fee transactions have dramatically decreased on both Blur and OpenSea, with creators likely needing new income-generation strategies. On the battle between the marketplaces, the report notes that OpenSea’s user base is considered more organic and potentially more sustainable in the long run. At the same time, short-term whales mainly drive Blur’s dominance.

Despite declining floor prices for…