September NFT Industry Analysis: Bear Market Sentiment Still Prevails

Author: stella@footprint.network

In September, the renowned mainstream media outlet Rolling Stone published an article titled "Your NFTs Are Actually --- Finally --- Totally Worthless," which garnered widespread attention. The article claimed that "95% of once-hyped crypto assets have plummeted to rock bottom," rendering them "basically worthless." While this assertion struck a nerve, the reality is more nuanced, providing reasons for optimism.

Despite a significant decline in the NFT market in September, it still achieved a trading volume of $370.9 million. We must recognize that $370.9 million is not "worthless"; it still holds some value. In this report, we will delve into the dynamics of blockchain networks, NFT trading markets, and investment activities in the NFT space. We will find hope in these aspects.

The data for this report comes from Footprint Analytics' NFT research page. This page offers an easy-to-use dashboard containing the most critical statistics and metrics to understand the latest developments in the NFT industry, updated in real-time. You can click here for the latest information on transactions, projects, financing, and more.

Key Highlights

Crypto Market Overview

• In September, Bitcoin's price fluctuated little, ranging between a low of $25,158 and a high of $27,210 during the month.

NFT Market Overview

• In September, the NFT market moved in the opposite direction of Bitcoin, experiencing a significant decline with a sharp drop in trading volume.

• The blue-chip index showed a downward trend in September, decreasing by 7.5% over the month.

Public Chains and NFT Trading Markets

• Ethereum's trading volume reached $364 million, down 30.3% from August.

• Blur's dominance in trading volume is gradually weakening. LooksRare's market share in September was 19.3%, showing an upward trend.

NFT Investment and Financing Situation

• In September, the NFT market continued to show a sluggish trend, with three rounds of financing totaling $27.14 million.

• Notable crypto investment firms like A16z have shown signs of a "bottom-fishing" strategy but have yet to invest in the NFT space.

Key Developments This Month

• Walmart will sell the NFT project Pudgy Penguins' toy series in 2,000 stores across the U.S.

• Google will allow advertisers to use its ad services to promote non-gambling-related NFT games starting September 15.

• Animoca Brands raised $20 million for its Mocaverse project.

• NFT art platform TRLab completed a $5 million seed round, led by Hivemind Capital and OKX Ventures.

• Casio will release 15,000 limited edition G-SHOCK NFTs on Polygon on September 23.

Crypto Market Overview

In September, Bitcoin's price fluctuated little, ranging between a low of $25,158 and a high of $27,210. The initial price at the beginning of the month was $25,940, with a slight increase of 3.7% during the month, ultimately closing at $26,899.

Data Source: BTC Price & ETH Price

Compared to the previous month, Bitcoin's value and on-chain activity increased in September. The rise in on-chain activity may be due to investors entering the market in preparation for the potential approval of a spot Bitcoin ETF by regulators. The spot Bitcoin ETF made some progress in late August.

Additionally, the trustee of the Mt Gox cryptocurrency exchange will delay repayments to creditors until October 2024. They currently hold approximately 138,000 Bitcoins, valued at $3.7 billion, and this decision may reduce market sell-off expectations, positively impacting Bitcoin's performance in September.

NFT Market Overview

In September, the NFT market moved in the opposite direction of Bitcoin, experiencing a significant decline, with the largest drop in trading volume. The total trading volume in September was $370.9 million, a substantial decrease of 30.6% compared to August; the number of transactions also decreased to 1,038,886, down 7.7%; the number of unique users was 244,186, a decrease of about 22.5%.

Data Source: NFT Market Overview

The recent market slump has significantly impacted market capitalization, which fluctuated throughout the month and showed a downward trend.

Data Source: NFT Market Cap & Volume

In September, the buyer/seller ratio in the NFT market was 103.0%, down 29.2% from August. There were 14,832 buyers and 143,617 sellers throughout the month. Notably, compared to the previous month, the number of buyers decreased by 30.6%, while the number of sellers decreased by 11.0%. These figures indicate a slowdown in NFT market activity in September, with fewer participating buyers and sellers, and bearish sentiment still prevailing.

Data Source: Daily Buyers & Sellers

In September, the trend of daily unique users mirrored that of daily buyers/sellers. Notably, from September 20 to 22, user engagement increased, primarily related to airdrop activities associated with the Pandra: PixelProwler NFT on four blockchains, with Polygon users showing the most significant participation.

Data Source: Daily Unique Users

The blue-chip index showed a downward trend in September, with a decline of 7.5%.

Data Source: BlueChip Index

Despite significant price drops in some popular NFT series, some projects are exploring opportunities beyond the NFT trading market to attract a broader audience in the real world. One approach is to sell physical products through existing platforms.

An example is Pudgy Penguins, which recently launched the Pudgy Toys series in 2,000 Walmart stores across the U.S. Each toy comes with a unique "birth certificate," allowing owners to apply for unique traits for their digital "forever Pudgy" characters in Pudgy World. This online virtual world operates on the zkSync Era chain, where users can scan a QR code to activate their digital characters. Pudgy Penguins effectively utilizes social media and experiential marketing strategies to engage and retain audiences, distinguishing itself from other NFT brands struggling to maintain momentum.

Source: walmart.com

Public Chains and NFT Trading Markets

In September, Ethereum's trading volume reached $364 million, accounting for 98.1% of the total NFT market trading volume. However, compared to August, Ethereum's total trading volume decreased by 30.3%, reflecting the overall downward trend in the NFT market.

Data Source: Monthly Volume by Chain

Ethereum attracted a total of 135,600 unique users, down 8.1% from August. Polygon's unique user count also declined to 93,700, a decrease of 30.5%. BNB's unique user count was 31,700, a significant drop of 42.2%. User participation has been consistently declining over the past few months.

Data Source: Monthly Unique Users by Chain

In terms of NFT trading markets, Blur's dominance in trading volume is gradually weakening. In September, its market share dropped from 48.9% to 47.0%. This downward trend began in June when its share was 64.4%. In contrast, LooksRare's market share has shown an upward trend during the same period, rising from 8.9% in June to 19.3% in September. Meanwhile, OpenSea's market share remained stable at 22.4%, slightly down from 23.2% in August. The NFT market landscape is changing, with Blur's dominance waning and LooksRare gaining appeal.

Data Source: Monthly Volume by Marketplace - Distribution

Throughout September, the NFT trading market continued to engage in intense discussions surrounding NFT royalties. Rarible announced its decision to stop aggregating orders from OpenSea, LooksRare, and X2Y2 after September 30. This move demonstrates Rarible's support for royalties.

Source: Rarible X (Twitter)

The debate over royalties began in February 2022 when X2Y2 started charging creators 0% royalties. Subsequently, platforms like Sudoswap, Magic Eden, and LooksRare adopted similar practices. OpenSea, initially a staunch advocate for creator royalties, had set royalties as high as 10%. However, in February of this year, under competitive pressure from Blur, OpenSea reduced its royalties. Recently, OpenSea decided to make royalties optional, adjusting the previously mandatory Operator Filter tool that enforced creator royalties.

NFT Investment and Financing Situation

In September, the NFT market continued to show a sluggish trend, with three rounds of financing totaling $27.14 million.

Animoca Brands recently disclosed that they secured a binding financing commitment of up to $20 million. This funding aims to accelerate the development of Mocaverse. The round was led by CMCC Global, with participation from notable investors such as Kingsway Capital, Liberty City Ventures, and GameFi Ventures.

Source: Animoca Brands Website

Mocaverse is a dedicated membership NFT project for Animoca's numerous companies, projects, investors, shareholders, and partners. Its primary goal is to build Web3-native tools to empower gaming, culture, and entertainment products. Through Mocaverse, users can create their digital identities, accumulate reputation, earn and use loyalty points, and leverage their digital identities to access the vast Mocaverse ecosystem. Animoca has over 450 companies under its umbrella and investments, with more than 700 million potential users. Mocaverse will soon launch Moca ID, a series of non-transferable NFTs designed to help users shape their on-chain identities and actively participate in the Mocaverse ecosystem.

NFT art platform TRLab announced the completion of a $5 million seed round, led by Hivemind Capital Partners and OKX Ventures, with participation from HashKey Capital.

TRLab is dedicated to collaborating with artists, foundations, and art institutions to conceive, create, and launch art experiences, particularly providing high-quality digital art interactions for both established and emerging collectors. TRLab has collaborated with mainstream fashion magazine Vogue, the Calder Foundation, contemporary artist Cai Guo-Qiang, and Rhizome (a digital art organization affiliated with the New Museum in New York) to release multiple projects.

Source: Your Daytime Fireworks by Cai Guo-Qiang- TRLab

Despite the continued sluggishness of the crypto market in September, notable investment firms like a16z have shown signs of engaging in "bottom-fishing" strategies. Notably, from June to August 2023, a16z maintained relatively low investment activity, with only one investment per month. However, their recent resurgence is evident, with four investments made in September, although none targeted the NFT market.

Conclusion

Mainstream media often pursue extreme narratives, focusing on absolute highs and lows to create eye-catching headlines. Amid this media frenzy, it is essential to remember that those dedicated to creating and building NFTs are tirelessly working behind the scenes, unaffected by market fluctuations.

When media outlets like Rolling Stone publish such articles, people are saying, "Now is the time to buy."

The data in this research report includes:

• Chains: Ethereum, Polygon, BNB Chain, Cronos, Optimism

• Trading Markets: OpenSea, LooksRare, Blur, X2Y2, Cryptopunks, Rarible, SuperRare, Foundation, Decentraland, Aavegotchi, Element, Era7, the Sandbox, Minted

This article is contributed by the Footprint Analytics community.