Nansen, a blockchain data analytics company, recently released its quarterly study on non-fungible tokens (NFT). The analysis highlighted the year-to-date outperformance of the NFT sector in the cryptocurrency market, predicting a market valuation of $80 billion by 2025.
The NFT market has overtaken the cryptocurrency market this year, according to the Nansen Quarterly NFT Report 2022, with a year-to-date return of 103.7% in ETH and 82.1% in USD. Despite a decline in global markets across most asset classes at the end of February 2022, the NFT-500 gained 5.9% over the previous 30 days in March.
Louisa Choe, author of the report, said: “The NFT market continues to outperform the cryptocurrency market year-to-date with a 49.9% year-to-date return when it is denominated in ETH.”
The volatility of each of these sectors varies, and according to Nansen research, Blue Chip NFTs, which are ranked by market size, are the least volatile. Azuki, Clone X and Doodles, among others OpenSea chart-topping compilations, were designated as Blue Chip.
This is likely due to their growing popularity in the crypto world and the fact that they can be considered solid long-term investments due to their track record of development and value.
The composition of the Social-100 index remained virtually unchanged before and after its rebalancing. However, the proportion of access and membership NFTs and utility NFTs has increased.
When measured in ETH, the Social-100 index is up 49.9% year-to-date, but when measured in USD, it is up 37.5%.
Access and membership NFTs and utility NFTs include NFTs that give cardholders access to certain events, products or services. For example, the entertainment company Mola hosted the Mola Chill 2303 event on March 23. Attendees had to purchase passes in the form of an NFT to access the sci-fi themed event.
Bored Ape Yacht Club also held a dating event in July 2021, which was exclusive only to people who owned a Bored Ape NFT. Social clubs could be one of the main drivers of growth in NFT access and membership.
Metaverse and art NFTs, on the other hand, have been considered the most volatile part of the NFT market by research. The Metaverse portion includes land and real estate NFTs, avatars, and utility NFTs, according to Nansen. Pricing can be difficult to assess, especially for virtual land to like Decentralized or The sandbox.
The subjective aspect of assessing value, as well as the somewhat illiquid nature of art, contributes to its volatility when it comes to art NFTs. Nansen demonstrated that generative art is the most popular component of artistic NFTs in general and that the majority of players in the metaverse and the art market are “speculators”.
The Nansen indices also show that the overall growth of the gaming industry is declining. With a drop of -24.4%, the Gaming-50 index fell the most of all NFT niches included in the research.
Despite this decline, the overall NFT market looks very healthy compared to the crypto market. NFTs are a dynamic and rapidly growing area of the cryptocurrency industry, and this is especially true for retail investors.
However, understanding the competitive environment of the NFT market is essential for NFT market participants who wish to collect, trade or invest in NFTs.
With the Nansen Social-100 NFT Index leading the year-to-date returns, it appears that a broad approach that includes a diverse range of collections could be beneficial in generating profits. It is therefore essential that market participants do sufficient due diligence before investing.
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NFT Market Grows More Than Crypto Market According To Nansen Report
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