When will the next bull run come?

Italian tomato sauce on Vincent van Gogh’s $86 million oil painting ‘Sunflowers’? This cannot happen to the owners of NFTs. The non-fungible tokens exist on the blockchain and are traded exclusively online.

The digital images of monkeys, kittens or so-called cryptopunks experienced a hype phase last year that should soon come to an end. After a blistering bull run, the NFT market is now in a downward trend.

NonFungible.com’s quarterly NFT market report takes stock of what’s happened over the past few months. Although the analysis team does not have a “crystal ball”, there could be light at the end of the tunnel for the NFT sector.

interest rate low

After the devastating collapse of Terra and the generally poor macroeconomic situation, it is no wonder that capital markets have been stagnant for weeks. Crypto assets and NFTs have not gone untouched either. Accordingly, the search volume for “Non Fungible Tokens” is at a relatively low level.

As the report also points out, China is the number one country in terms of search volume. “This clear interest in NFTs goes against the discourse of the country, which opposes cryptocurrencies and any kind of deregulated assets,” the authors write. Last year, China’s central bank imposed a bitcoin mining ban. The industry is still thriving.

A closer look at the country distribution shows an equivalence: four of the five countries with the highest search volume are in Asia. The only non-Asian country to make the top 5 is Nigeria. Although cryptocurrencies and especially bitcoin should also be banned here, the Nigerian population has always shown great interest in crypto technology.

The analysts find it interesting that “official” bans do the opposite. The population is then only more interested in the forbidden subject.

Depression across the board

The merger of Ethereum in mid-September was seen as a great success. However, so far there has been no sudden price increase. On the contrary: between the beginning of April and the end of September, the price of ether coins fell by 57 percent. At the same time, NFTs also lost a lot of value. The average loss per NFT is no less than 87 percent.

At the same time, almost half of users left the colorful photo market. In January there were still almost 450,000 active wallets registered on the various blockchains, now this number is around 200,000 active users. The analytics team softened the decline:

Buyers still outnumber sellers, with a ratio of about 1.3 buyers to 1 seller.

The demand therefore still exceeds the existing supply. At the end of the third quarter, the ratio seems to stabilize further. For 150,000 buyers, there would be 110,000 sellers.

When will the next bull run come?

However, there is a glimmer of hope. While analysts say some NFT projects are “dead,” most of the industry behind them is not automatically dead. “The era of the NFT market, where profit and speculation reigned, is over. Little by little, a new history of this technology is being written,” it continues. The argument for this change is the interest of various industries.

And indeed: well-known brand companies such as Starbucks, Nike, competitor Adidas or Gucci have been looking for a way into the crypto and NFT ecosystem for some time. The tokens should above all offer benefits to customers.

NonFungible.com sees a learning curve here: “The industry has learned from 2021 and is preparing for the next wave of mass adoption.” When this time is exactly, the analysts do not disclose. After all, they don’t have a “crystal ball”.

methodology

NonFungible.com collected blockchain data through special proprietary “Blockchain Nodes”. The findings discussed in this report came from analyzes of ERC-721 tokens, the Ethereum, Ronin and Flow blockchains.

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