NFT Market Comes Roaring Back as Ethereum Rises

The market for crypto collectibles sold as NFTs cooled down in recent months following the spring boom, but a recent flurry of high-dollar sales and staggering levels of trading volume suggest that NFTs are gaining momentum again.

NFTs exploded in popularity in early 2021, with some $1.5 billion in trading volume in the first quarter alone per DappRadar—a 2,627% year-over-year increase. Dapper Labs’ NBA Top Shot helped introduce NFTs to the mainstream, CryptoPunks cracked seven figures apiece, and celebrities made millions while brands like Taco Bell and Charmin jumped in on the trend. Whether it was a still image, video clip, tweet, or some other digital item tokenized on a blockchain, NFTs were selling like hotcakes.

But then the momentum seemed to fade. Critics called NFTs a fad and complaints about the environmental impact of Ethereum minting got louder, Top Shot prices fell off a cliff, and attaching a celebrity or athlete to an NFT drop was no longer a guarantee of success. Still, transaction volumes hit $2.5 billion for the first half of the year, suggesting a dip in interest from the first quarter but still plenty of activity happening… albeit with less fanfare than before.

The buzz is building again, however. Just look at some of the headlines from the last week alone: Investor and influencer Gary Vaynerchuk bought a CryptoPunk for $3.7 million in Ethereum, with another selling for $5.4 million just hours later. Stoner Cats, an animated web series from Mila Kunis and Ashton Kutcher, raised $8.3 million through the sale of NFTs (while generating a heap of failed transaction fees). And the average price of a CryptoPunk soared 53% over the span of a week to $135,000, with one wallet holder spending more than $6 million on a stash of them.

Today, NFT marketplace OpenSea put an exclamation point on the last week of movement, as CEO Devin Finzer tweeted that it had processed some $95 million worth of transactions within just two days. By contrast, OpenSea had about $21 million of volume in all of 2020 alone. The popular Bored Ape Yacht Club NFT collection hit a new peak average price point on OpenSea over the weekend, all the while, and currently sits at about 11 ETH (about $29,000).

On top of all of that, play-to-earn Ethereum game Axie Infinity has put up incredible numbers in recent weeks. According to data from its marketplace that runs on the Ronin sidechain, Axie has moved $875 million worth of NFTs in the last 30 days, with about $197 million of that happening within the last seven days.

Last month, Axie Infinity was making more money in fees than either the Bitcoin or Ethereum protocol in a seven-day span, based on all of that NFT volume—and the game’s AXS native governance token is up more than 550% in value over the last 30 days, as well. The latest data shared by developer Sky Mavis earlier today points to more than 900,000 daily active users for the leading crypto game.

Before the last week or so, Axie’s recent surge seemed to be detached from the overall NFT market movement. But now, amidst rising volume elsewhere, soaring price floors for top collections, and more and more top-dollar sales in the mix—all perhaps driven by the recent upswing in cryptocurrency prices—it looks like NFTs are hot again. Whether this latest buzz continues longer-term, however, remains to be seen.