The market slows down, where is the money flowing?
At the start of 2021, only a handful of crypto-savvy people (crypto) are really interested in NFT (non-fungible token), the size of less than 1 billion USD. But by year-end, nearly $41 billion had been spent on NFTs. This means that the size of the NFT market is roughly the same as the global traditional art market, at $50.1 billion (2021). NFT really became a “craze” in March 2021 when an artwork of Beeple was sold for $ 69.3 million. According to Chainalysis, individuals trading small value NFTs (under $10,000) account for 75% of the market capacity. The NFT market is dominated by a handful of “sharks”. From the end of February to November, there were 360,000 NFT holders holding $2.7 million worth of NFT; of which about 9%, or 32,400 NFT, hold 80% of the market value. According to Stephen Diehl, a software engineer, many “sharks” are “sitting on hundreds of millions of dollars in crypto assets” from the crypto-asset price boom.
However, so far the majority of new NFT collectors have not been able to break even the cost of acquiring the NFT, Nansen said. Meanwhile, early NFT investors benefited from the rise in NFT or the cryptocurrency it used to exchange. Some people approach the NFT market for both trading and collecting. Famous NFT investor Pranksy on Twitter, started investing $600 in NFT in 2017. To date, he has an NFT portfolio of up to $20 million. Currently, most NFTs are priced in Ethereum. This means an ecosystem is expanding with ETH demand. The NFT marketplace is expected to offer more and more features, such as allowing artists to profit from the rental and sale of NFTs; NFT-based financial activities such as lending or equity splits; as a catalyst for e-commerce in the metaverse (virtual universe). And recently, Nike also bought a virtual shoe company to create NFT-style virtual shoes.