January 24, 2022
Non-fungible tokens, or NFTs, which refer to non-interchangeable digital assets stored on a blockchain, are seeing the boom continue, while the overall crypto market has been sluggish over the past few weeks. Major cryptocurrencies have seen losses over the past seven days, though most traded up Thursday.
The largest NFT marketplace OpenSea, which usually takes up more than 90% of the total NFT trading volume, saw its transaction volume on the Ethereum blockchain surpassing $4 billion so far in January, on pace to record its highest monthly volume in history, according to data from Dune Analytics. “We think just in general, NFT is kind of uncorrelated with the greater digital asset space,” Eric Chen, co-founder of Injective, a decentralized exchange protocol, told Distributed Ledger in an interview
Major cryptocurrencies, especially bitcoin, have been lately trading in tandem with stocks facing macroeconomic uncertainties, while NFTs are attracting growing mainstream attention, as companies and celebrities roll out their own NFT collections. Most recently, Twitter launched a verification mechanism for NFT profile pictures available to some users.
Meanwhile, trademark filings show that retail giant Walmart is looking to create its own cryptocurrency and non-fungible tokens in a push into the metaverse. Gap Inc. recently launched NFTs of digital hoodie art, following Nike, Adidas and Macy’s, who already made moves into the NFT space.
Furthermore, NFTs got a boost in popularity when Facebook FB, -4.23% changed its name to Meta in October to show its determination to build a Metaverse, in which NFTs are considered important components. Meta is also reportedly seeking to create its own NFT marketplace, according to the Financial Times citing several people familiar with the matter.
“This awareness from mass market brands is driving adoption,” Paul Judge, managing partner at crypto venture capital firm Panoramic Ventures said in an interview. The space has seen more newcomers and also more activities per user, according to Judge.
“On the one side, an NFT is a collectible, so you have people who buy it and hold it for a very long time. On the other side of the asset, you have people who trade it and have different frequencies of trading it similar to the stock market,” said Judge. “You almost have to compare [NFT marketplaces] on one side to Etsy ETSY, -6.55% and eBay EBAY, -1.93%. But then on the other side, you have to compare it to Nasdaq.”
Exchanges’ NFT marketplace
Crypto exchanges have also joined the race among NFT marketplaces. FTX in October launched a marketplace for Solana-based NFTs, while it later added collections of Ethereum-based NFTs.
Meanwhile, more than 3.1 million people have joined the waitlist for Coinbase’s COIN, -13.38% to-be-launched NFT platform. The crypto exchange has partnered with Mastercard MA, -2.45% to allow users make purchases on the marketplace using Mastercard debit and credit cards. Crypto exchanges have their special places in this competition.
If you can do more than one thing on one platform, there’s a synergy or efficiency to be had there. Like you can use your crypto holdings to do things in the NFT world and use your NFT holdings to do things in the crypto world either as a collateral or other things. NFT’s are focused on art and unique assets and that category is just beginning, the types and breadth of assets that would benefit from unique ownership and transactions are going to obviously continue to increase.