Non-fungible tokens, or NFTs, were all the rage in 2021, soaring to astronomical heights along with skyrocketing cryptocurrency prices. However, cryptocurrency prices fell off a cliff in 2022, throwing cold water on the NFT market. Prices have fluctuated dramatically, and trading volumes have been far below those seen in 2021.
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But where exactly does the NFT market stand now, and how is it setting up for 2023? Here are some insights into this still-growing field.
NFT Transaction Volume in 2022
Overall, NFT transaction volume in 2022 slowed dramatically. From January 2022 to September 2022, NFT trading volume collapsed by 97%, from $17 billion in value to just $466 million. 
In June 2022, the total number of daily sales was about 19,000, with a dollar value of just $13.8 million. From March through June 2022, total NFT market cap fell by 40%, while trading volume collapsed by 66% — right in line with falling cryptocurrency prices, particularly Ethereum.
May 1, 2022, was still the single-highest value trading day in NFT history, when 118,577 NFTs were sold for a total value of $780.4 million. But, as the crypto market has continued to linger in a “crypto winter,” NFT prices and transactions have not shown any serious signs of recovery.
Top Dollar NFT Sales in 2022
Even though the NFT market has dried up to some degree in 2022, there were still plenty of notable high-dollar sales. In fact, given the way the crypto market completely imploded beneath it, the NFT market actually held up fairly well, at least in terms of high-dollar sales. Here were the top-dollar NFT sales in 2022:
XCOPY’s All Time High in the City, January 2022: 1,630 ETH ($6.2 million at time of sale)
CryptoPunk #5577, February 2022: 2,501 ETH ($7.7 million at time of sale)
CryptoPunk #5588, February 2022: 8,000 ETH ($23.7 million at time of sale)
Julian Assange and Pak’s Clock NFT, February 2022: 16,953 ETH ($52.7 million at time of sale)
On the plus side, it’s notable that CryptoPunk #5588 was the highest-priced CryptoPunk NFT ever sold, and it sold in 2022. But the fact that there were no top-dollar sales of NFTs after February 2022 is a clear indication that the NFT market began to recede as the year wore on.
What Lies Ahead in 2023?
Although there’s no doubt that the NFT market has taken a serious hit in 2022, there are still some very bullish analysts and industry insiders who see 2023 as being much kinder to the market. This hope rests on the fact that NFTs are a crucial part of the digital economy, which seems destined to expand even if it doesn’t become the “parallel universe” equally important to today’s market that some predict.
The theory behind this bullish outlook is that NFTs will continue to be adopted by video games, artwork, music and digital collectible industries. If life does indeed become more virtual in the coming years — where consumers use virtual assets in the metaverse — NFTs may indeed have staying power. A report from Verified Market Research, for example, projects that the market value of NFTs will jump to $231 billion by 2030.
However, prices likely will need to reverse course before the hype returns to the sector. In November 2022, Google reported that searches for NFTs have dropped by 88% in less than a year, perhaps the best real-world indicator of how interest in the sector is waning.
The Bottom Line
NFTs always have been a speculative asset class, and they remain so. Regardless of whether price momentum returns to the sector or not, investors should prepare for volatility in NFT pricing for the foreseeable future.
The question investors have to answer for themselves — in conjunction with a financial advisor — is whether the plunging prices and trading volumes in 2022 are an indication of a wash-out bottom or just the beginning of the pain in the sector.
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