The Non-Fungible Tokens (NFT) industry has been at the center of innovation and growth over the past year, but as it approaches the midpoint of 2023, the market is showing signs of maturation and change. According to a recent report by DappRadar, NFT sales may fall below $1 billion for the first time this year.
NFT Market Faces Headwind
According to the report, the NFT market shows signs of a potential shift in May 2023, with the volume of trade reaching $333 million from $2.3 million in sales, a trend that could result in the first month of this year has a trading volume under $1 billion. .
Despite this decrease in sales, the NFT industry still shows strong activity and engagement, with daily unique active wallets (dUAW) involved in NFT activities reaching 173,000 , marking a 27% increase from last month.
However, the NFT market is facing significant challenges, with many traders selling their large NFT holdings at a loss to join the Memecoin frenzy, according to DappRadar. This led to an uptick in on-chain activity, pushing Ethereum gas fees above $100 and negatively impacting the number of low-value NFT trades on the blockchain.
Despite this, the NFT market is still experiencing significant developments and events. Elon Musk’s tweet on May 10, 2023, referring to the Milady Maker collection, boosted the increase in trade volume, which reached $13.95 million and doubled the number of trades in the same week.
In addition, the Pudgy Penguins project received $9 million in seed funding, debuting the Pudgy Toys collection, which earned a total trade volume of $7.89 million in the following week.
Additionally, the top ten NFT sales reveal stalwarts like Bored Ape Yacht Club and CryptoPunks dominating the NFT scene. However, a new entrant emerged in sixth position – an ADA handle, a personal crypto domain on the ADA blockchain, sold for $182,089, equivalent to 500,000 ADA.
Bitcoin Ordinals vs. NFTs
Bitcoin Ordinals, a new form of digital asset, has been a hot topic in the decentralized app (dapp) community since its launch by software engineer Casey Rodarmor on January 21. This protocol has gained a significant following, which there are over 7.4 million Ordinals created at the time of writing.
Ordinals differ from NFTs because they put all their data directly on the chain, earning the label “digital artifacts”. This feature makes Ordinals a potential technical upgrade over NFTs and a shift in the Bitcoin cultural landscape.
However, the rise of Ordinals and the BRC-20 token standard, which enables the deployment of meme coins on the Bitcoin blockchain, has sparked concern among Bitcoin maxis. These changes made the Bitcoin network difficult, leading to a backlog of unconfirmed transactions and increased fees. The increase in transaction demand caused the fees to rise to $31 on May 8, 2023, according to a DappRadar report.
Despite the challenges, the increased activity boosts miner fees, improving the overall security of the Bitcoin blockchain. The surge in fees reflects the increasing number of people using Bitcoin for non-financial purposes, such as creating and selling Ordinals and speculating on tokens.
Ordinals Protocol has produced interesting collections and impressive sales, with Ordinal Punks and TwelveFold as notable examples. These collections have seen trading volumes, in the last 30 days, of 11.85 BTC and 14.9 BTC, respectively, showing significant interest and engagement in the new digital asset.
The introduction of Bitcoin Ordinals represents an exciting development in the NFT space, opening up new possibilities for digital asset creation and trading. However, it also highlights the need for continuous innovation and upgrading to meet the challenges posed by increased activity and demand on the Bitcoin network.
Featured image from iStock, chart from TradingView.com