Looks like NFT holders slept through the panic trading. NFT Trading Volume continued to increase despite the crypto crash last week. The marketwide crash saw Bitcoin lose 30% of its price. It also wiped out more than $1 trillion off the crypto market cap. In effect, almost one million traders liquidated in one day. Despite this, users continued to purchase, trade and sell NFTs.
According DappRadar’s report, the average number of NFT sales tripled from 21,815 per day in January, to 82,373 in May (so far). This number rose even higher as crypto prices started to plummet on May 12, with sales soaring to almost 94,000 NFT transactions a day. NFTs are not slowing down anytime soon.
NFT Trading and Crypto Trading: What’s the difference?
Bitcoin is speculative in nature. Price action is determined by recent news and the sentiments of the holders about it. For example, BTC price soared after Tesla announced that it will buy $1.5 Billion worth of BTC and accept it as mode of payment. Inversely, the market was sent into turmoil last week when Chinese regulators announced a clampdown on cryptocurrencies.
NFTs are also speculative assets but are proving to be bullet-proof against market crashes. This is because NFTs have utility not affected by speculation. Yes, there are NFT holders looking to make a margin from trading their NFTs. However, most holders are collectors and acquire NFTs with the intention of keeping them. This is particularly true for 1:1 Collectibles.
Generally, altcoin prices follow the price of Bitcoin. This tends to be because altcoin buyers generally purchase Bitcoin with fiat currency (like dollars and euros) and then exchange it for their chosen altcoin. Meanwhile, NFTs can also be purchased directly via debit or credit card on some platforms. The volatility of the market does not affect the purchasing power of the users.
More Mainstream Players
Athletes, celebrities, teams and artists have launched their own NFT Collection. The target market of these NFTs are fans and followers who are not necessarily crypto holders. For example, out of the 4.5 Million transactions processed by NBA Top Shot, over 3 million were worth approximately $50. Although it is a small-dollar figure, the steady transactions prove that NFTs are gaining ground.
In the Crypto world, it is either a bear market or a bull market. A bear market is when a market experiences prolonged price declines. A bull market is the condition of a financial market in which prices are rising or are expected to rise. 2021 falls under the bull market with BTC reaching its all time high. Meanwhile, NFT Trading volume is not dependent on a financial cycle. The volume will continue to rise as long as there are interesting NFT Collections.
Other Winner: Decentralized Platforms
Panic trading ensued after the market crashed. Centralized platforms were unable to handle the exponential increase in volume. On the other hand, decentralized platforms operated business as usual. Transactions in the Ethereum blockchain were slow and gas fees rose – giving a chance to other networks. Binance Smart Chain operated as normal. BSC maintained lower fees and fast processing in under 5 seconds. Polygon also maintained its service level.