NFT Transaction Volume Sees First Dip of 2021

The 2021 crypto craze has hit its first hiccup, according to recent data. After rising for the first three months of the year, the transaction volume of non-fungible tokens (NFTs) dropped in April, from $217 to $83 million, the first month-over-moth downturn of the year, according to industry analyst Dapp Radar. The number of traders also dropped in April, mostly due to technical issues surrounding the NBA Top Shot, a digital collectibles platform where users buy, sell and trade digital highlights from professional basketball games. Industry experts attribute the one-month slowdown to the natural waxing and waning of the volatile cryptocurrency market rather than a sign of fizzling consumer interest. “We've been at this for three years,” said Jonathan Perkins, cofounder of digital art marketplace SuperRare. “If you zoom out, you see an undeniably healthy, strong growth curve.” Drop in number of traders Crypto enthusiasts buy, sell and trade NFTs using a variety of blockchains, each of which circulates its own currency. At the moment, the three most popular blockchains for NFT exchange are Flow, Wax and Ethereum. In April, the number of traders across the three major platforms declined. Flow, which owes its prominence largely to its status as the native currency of NBA Top Shot, leads the pack in total traders, with more than 60,000 “active wallets” on the platform daily. Its user base has shrunk, in part, due to technical issues with Top Shot that have left users frustrated. As part of its stringent verification process, the platform can take upwards of 40 days for traders to withdraw their funds, a bottleneck that has stymied usage. Behind Flow, the Wax blockchain commands the second-highest number of daily active wallets, with more than 18,000 active traders. Two decentralized applications, Alien Worlds and Atomic Market, account for more than 70% of this trading. Finally, Ethereum—perhaps the most widely known cryptocurrency beside Bitcoin itself—controls a smaller set of daily active traders (14,600), but it boasts a larger transaction volume than its two peers thanks to platform CryptoPunks. In April, five of the 10 largest NFT purchases occurred on CryptoPunks, where top sales varied between $600,000 and $1 million. Drop in transaction volume The cumulative monetary value of NFT transactions also dropped in April, largely a result of the decrease in the number of Top Shot traders, who use the Flow blockchain. Users unable to withdraw their money from the platform have criticized the site for its lengthy delays, discouraging new traders and shrinking involvement from current users. A drop in activity on Ethereum-based platforms OpenSea and Rarible also led to a downturn in NFT purchases, decreasing transaction volume by 19% compared to March. Overall, from March to April, transaction volume decreased from $217 million to $83 million. Industry experts remain optimistic Alanna Roazzi-Laforet, chief revenue officer of cryptocurrency-centric publisher Decrypt, says the decrease in transaction volume indicates little more than the natural rhythm of the market. Hype cycles like the one that captured country-wide interest in February and March elevate awareness of the crypto world, sowing the seeds for an uptick in adoption in the coming months. “When the market flies up, in general, people HODL,” Roazzi-Laforet said, using an acronym meaning "hold on for dear life." “Because they want to gain value on their investment.” Likewise, professor Merav Ozair, an expert in cryptocurrency and financial tech at Rutgers University, sees the core user base of cryptocurrency enthusiasts growing month after month. Its real-world applications make the growth of crypto an inevitability long term, Ozair says, even if growth does not build on itself in every consecutive month. “It's similar to the hype that surrounded early internet companies––how many of those survived? Almost none,” Ozair said. “But then it shifted to something more meaningful, and now we have the internet as we know it: a useful service.” Crypto Publisher Decrypt Launches Token Cryptocurrency for NFTs

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NFT Transaction Volume Dipped in April, Its First Downturn of 2021

Appetite for non-fungible tokens has momentarily cooled

Mark Stenberg

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Mark Stenberg