If crypto trading is still a niche activity, then NFTs are a niche within a niche, and the past year has seen active market participants gradually becoming narrowed down to true believers.
Overall, NFT trading volumes dropped, trades by new wallets went down, meaning fewer new participants, and NFT interest on Google Trends showed a running decline (aside from when Donald Trump launched an NFT collection, causing a temporary spike in interest last month).
All of this does not mean that nothing has happened in the NFT space. There have been new collections released and occasional bursts of activity, but, on the whole, the mood has changed significantly.
There was an air of competitive ruthlessness, a realization that without new traders, existing funds were simply rotating around projects, and a deep lack of conviction in any upward price movements, with the default presumption being that any positive run was extremely short-term and not to be trusted.
With the market looking worse for wear and subdued, some builders were reluctant to launch anything new, resulting in further market doldrums, leading again to reluctance to act, and an all-round sense of frustration.
Renewed Activity
Skip through to where we are now, in the middle of January, and the mood around NFTs has changed markedly. Prices are rising, new developments from high-profile collections are lining up, and there is even talk of a bullish trend taking shape.
Notably, the top gainers are large well-established projects, the so-called blue chips (although that phrase is used more flippantly in NFTs), including Yuga Labs collections, Azuki, and Sorare football NFTs.
However, the positivity has spread out. Some less well-known collections have experienced a boost, and suddenly, launching a new project doesn’t seem quite such an intimidating prospect.
Why Are NFTs Moving Again?
It appears from data tracking new wallets that there has not yet been a significant uptick in new participants entering the market (as would be usual in a substantial bull run), so it’s not immediately clear what is driving these NFT price increases.
A first option for consideration is that it’s a simple correlation with upward movement in the prices of Bitcoin, Ethereum and altcoins.
By this reckoning, positive sentiment in crypto overall could lead to patiently sidelined NFT enthusiasts dusting themselves off and reentering the market, spurring others to do the same.
This aligns conveniently with some…
