The non-fungible token (NFT) industry has been a hub of innovation and growth over the past year, but as it approaches the halfway point of 2023, the market is showing signs of maturity and change. According to another a report According to DappRadar, NFT sales may drop below $1 billion for the first time this year.
NFT market facing headwinds
According to the report, the NFT market is showing signs of a potential turnaround in May 2023, with trading volume reaching $333 million from $2.3 million in sales, a trend that could result in the first month of this year with trading volume of less than $1 billion. .
Despite this decline in sales, the NFT industry continues to show strong activity and participation, with daily unique active wallets (dUAW) associated with NFT activities reaching 173,000, representing a 27% increase over the previous month.
However, the NFT market is facing significant challenges, with many traders selling their large NFT holdings at a loss to participate in the Memecoin craze, according to DappRadar. This resulted in an uptick in on-chain activity, driving Ethereum gas fees above $100 and negatively impacting the volume of low-value NFT trades on the blockchain.
Despite this, the NFT market is still witnessing important developments and events. Elon Musk’s tweet on May 10, 2023, mentioning the Milady Maker group, sent trading volume soaring, reaching $13.95 million and doubling the number of trades in the same week.
Additionally, the Pudgy Penguins project received $9 million in seed funding, debuting on Pudgy Toys Collection, which amassed a total trading volume of $7.89 million the following week.
Moreover, the top ten NFT sales revealed stalwarts like Bored Ape Yacht Club and CryptoPunks are dominating the NFT scene. However, a new entrant appeared in sixth place – ADA handle, a personal crypto domain on the ADA blockchain, which sold for $182,089, which is equivalent to 500,000 ADA.
Bitcoin Ordinals vs. NFTs
Bitcoin Ordinals, a new form of digital asset, has become a hot topic in the decentralized application (dapp) community since it was launched by software engineer Casey Rodarmor on January 21. This protocol has garnered a significant following, with over 7.4 million ordinal copies minted at the time of writing.
Ordinal objects differ from NFTs in that they contain all of their data directly on-chain, earning the designation of “digital artifacts”. This feature makes Ordinals a potential technical upgrade to NFTs and a shift in the Bitcoin cultural landscape.
However, the advent of Ordinals and the BRC-20 token standard, which enables meme coins to be published on the Bitcoin blockchain, has sparked concern among Bitcoin maxis. These innovations have strained the Bitcoin network, leading to a backlog of unconfirmed transactions and increased fees. The surge in transaction demand caused fees to rise to $31 on May 8, 2023, according to a DappRadar report.
Despite the challenges, the increased activity has boosted mining fees, which has strengthened the overall security of the Bitcoin blockchain. The large increase in fees indicates an increasing number of people are using Bitcoin for non-financial purposes, such as creating and trading cryptocurrencies and speculating on tokens.
The Ordinals Protocol has generated interesting compilations and impressive sales, with Ordinal Punks and TwelveFold being notable examples. These groups have seen trading volumes, in the past 30 days, of 11.85 BTC and 14.9 BTC, respectively, indicating significant interest and participation in the new digital asset.
The introduction of Bitcoin Ordinals marks an exciting development in the NFT space, opening up new possibilities for creating and trading digital assets. However, it also highlights the need for continuous innovation and updates to meet the challenges posed by the increased activity and demand of the Bitcoin network.
Featured image from iStock, chart from TradingView.com
