The first quarter of 2022 saw 950,000 unique wallet addresses sold and purchased as non-fungible tokens (NFTs), according to a recent Chainalysis report. The number of such addresses sold and/or purchased as NFTs in the fourth quarter of 2021 was 627,000, the report said.
Overall, the number of active NFT buyers and sellers rose every quarter beginning in Q2 2020 and ending in Q2 2022, the report titled, The Chainalysis State of Web3 Report said.
Non-fungible tokens (NFTs) are digital items whose units are designed to be unique, unlike traditional cryptocurrencies. NFTs store data on Blockchain and can be associated with files containing media, such as images, videos, audio, or even physical objects.
NFTs, which are routinely bought and sold on specialised marketplaces, often offer the holder ownership over the data, material, or item with which the token is attached. The NFT market saw explosive growth in 2021, but this growth hasn’t been consistent and has levelled off now in 2022. NFT transaction volumes have also increased significantly since the beginning of 2021, although this rise is volatile. Typically, NFT activity fluctuates each month.
As of May 1, 2022, collectors have sent over $37 billion to NFT markets in 2022, on pace to surpass the sum of $40 billion submitted in 2021.
NFT transaction growth has been erratic since late summer 2021, with activity essentially holding level, save for two major increases. These increases were most likely caused by the Mutant Ape Yacht Club collection’s debut and the opening of the LooksRare NFT marketplace.
Following that surge, however, NFT transactions began to decline sharply in mid-February, falling from $3.9 billion in the week of February 13 to $964 million in the week of March 13 – the lowest weekly amount since the week of August 1, 2021.
The NFT market, on the other hand, began to revive in mid-April and is currently nearing the weekly volumes seen earlier in the year, owing to the recent launch of the Bored Ape Yacht Club’s metaverse initiative.
Who Makes Use Of NFTs?
Central and South Asia happen to be the most populous regions, followed by North America and Western Europe. That said, no single region has accounted for more than 40 percent of total online NFT traffic since the beginning of 2021.
Also, the vast majority of NFT transactions are at the retail size, meaning below $10,000 worth of cryptocurrency. Institutional investors make up the majority of activity in certain weeks. However, as is the case with the NFT market as a whole, the growth of institutional-sized NFT transfers hasn’t been consistent.
As of April 17, 2022, institutional NFT activity has yet to reach the levels it did in the winter of 2021.
A period of reduced institutional activity roughly coincides with what appears to be an overall decline in interest in NFTs. Between late November and mid-February, institutional purchases grew each week, reaching 1,889 transactions during the week beginning February 13.