In the midst of a crypto market rally, the NFT sector stands apart, resolutely bearish despite the broader crypto surge.
Floor price of CryptoPunks NFT, 90 Days Chart. Source: https://www.coingecko.com/en/nft/cryptopunks
Nevertheless, there are indications of a potential recovery within the NFT market, marked by increased trading volumes and a surge in active projects.
The Discrepancy in Assets
Amidst the crypto resurgence, most assets bask in the green, with only two exceptions among the top 100 by market capitalisation.
Yet, the NFT market presents a tough puzzle. Leading players like CryptoPunks and Pudgy Penguins see their floor prices falter, with a 4% and 5% drop respectively over the past week.
The downturn doesn't stop there. The Nansen NFT-500 index currently stands at a somber 308, a far cry from its peak of 1,700 back in October 2022. It appears that the NFT market follows its own set of rules, impervious to the crypto fervor surrounding it.
Ray of Optimism?
But there's a silver lining in the NFT realm. Despite the overall downtrend, certain metrics suggest a possible turnaround.
Trading volumes on the mainnet Ethereum reached a yearly low of 29,742 ETH (under $50 million) in the week ending October 9.
However, the tide appears to be changing, with the week ending October 23 witnessing a spike to 47,369 ETH, equivalent to over $85 million in NFT trades and mints.
Furthermore, the number of "active projects," collections surpassing sales benchmarks, such as 10, 100, and 1,000 ETH, has doubled from 41 to 80 since October 8. This indicates that, even though the market is struggling, it's not defeated.
The NFT market operates independently of the broader crypto rally and is driven by unique factors like perceived value, rarity, and sentiment.
The present situation underscores this distinct contrast and the resilience and uniqueness of the NFT market. As trading volumes start to rise and active projects increase, there's a glimmer of hope that the NFT market might be planning its comeback, prepared to rise on its terms, independent of the crypto frenzy.