NFTs, like the rest of crypto, felt the influence of bad actors and market manipulators in 2022. Those launched after the start of the crypto winter did better.
A survey of 81 nonfungible token (NFT) collections on the Ethereum blockchain showed a sharp overall loss in market capitalization in 2022, according to a report from DappRadar released Feb. 9. Losses were not evenly distributed, however.
The Ethereum NFT market was worth $9.3 billion at the beginning of 2022, according to DappRadar’s valuation, and that figure dropped to $3.7 billion by year-end — a loss of 59.6%. The price of Ether (ETH) impacted the valuations:
“It is also important to consider that ETH lost 60% of its value last year, which had a strong influence on the value of the NFTs.”
The NFT market peaked in February 2022 at $19.1 billion, outperforming Bitcoin (BTC) and Ether until the Terra collapse in May. By the following month, NFTs had lost 88% of their value. The market hit its year low at $2.2 billion at the end of November, the month of the FTX collapse. The market finished the year up 68% from that low. The report notes:
“This retraction of the NFT market was not a reflection of NFT’s utility, but rather a result of bad actors and market manipulations.”
Yuga Labs accounted for two-thirds of the market in 2022, with its CryptoPunks and Bored Ape Yacht Club collections holding 46.7% of the market by themselves. The Otherdeed collection was Yuga Labs’ loss leader, falling 86.15%.
Related: Should Bored Ape buyers be legally entitled to refunds?
The Azuki, Pudgy Penguins and Degen Toonz collections were the only ones “launched in 2021 or early 2022 to experience significant market cap growth,” rising 113.89%, 260% and 204%, respectively.
NFT collections launched after the Terra collapse fared better. The report cites Potatoz (+134.68%), Renga (+211.63%), DigiDaigaku (+209.88%) and God Hates NFTees (+1,653.28%) as examples.
The report also traced the declining share of collectibles in the NFT market share. Collectibles started 2022 with over 90% of the market but held well below 75% of it in January 2023. Trading volume for NFTs in January 2023 amounted to $870 million.
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