Rapture #235: NFT Update
Since it has been a while, I wanted to give a quick update on some of the latest data and news items coming out of the NFT ecosystem.
Overall, NFT based activity has been steadily decreasing for months now. That being said, NFT adoption by larger corporations has accelerated.
Let's dive into the data.
By the numbers
Purely looking at the numbers, it is quite clear NFTs are in a severe bear market in terms of both prices and adoption. In fact, the numbers have even gotten worse from my coverage of them in Rapture #163.
While I did not monetize this call, I called the NFT bear market beginning at the end of January in Rapture #127. To me, NFTs of this cycle were similar to the altcoins of the 2017 cycle in terms of price action and hype. Consequently, just like altcoins topped a month or so after BTC apexed in December 2017, so too did NFTs top a month or so after fungible tokens apexed in November 2021.
Volumes disappearing displays the lack of demand for NFTs right now. Weekly trade volume for NFTs has plummeted from a high of $1.12 billion to $54.38 million last week, a drop of more than 95%.
Floor prices for most of the major collections have also drawn down materially from their ATHs. The BAYC floor price currently sits at $117,961, down more than 72% from its ATH of $432,478. The CryptoPunks floor prices is currently $109,756, down more than 54% from its ATH. Nearly all major collections are down by similarly high amounts.
Still, these drawdowns are not quite as a bad as many altcoins, so overall, I would say NFTs have performed better than expected in a bear market. That being said, volume has dried up, meaning that anyone who sits on a large amount of NFTs would have an incredibly difficult time liquidating them.
Top brands generating material revenue from NFTs
Despite NFTs overall being in a bear market, large traditional brands have successfully capitalized on the emergent technology. In fact, Nike has generated more than $185 million in total revenue already, $39 million of which came from the CloneX royalties. Six major brands, from Time Magazine to Gucci, have generated more than $10 million in NFT revenue so far.
Interestingly, most of the purchases of these brands' NFTs came from existing NFT users rather than first time users.
With Nike's success, I expect many other major brands are looking to copy their formula for NFT launches and that we will see many more collections coming to market over the next two years.
Takeaway
Interest in NFTs has severely waned since the peak of the bull market. I expect this interest to remain low if we continue to be in an overall crypto bear, which is my base case for the near to medium term future.
Despite the NFT bear market, major brands have still been able to capitalize on this new technology. Their success will attract more brands to try their hand at monetizing NFTs.
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