While NFTs have been one of the most talked-about innovations of the past decade, the reality is that NFTs currently make up only a small portion of the total crypto market. There is so much more growth to be had: and that’s the most exciting chapter of NFTs’ future to look forward to.
At the 2022 NFT LA conference, Messari crypto research analyst Adam Arreola presented on the current state of NFTs, the metaverse, and digital lands. In this presentation, Arreola offered insightful data and talking points that show both enormous potential and hefty risks associated with this technology.
In this article, we will discuss 3 of the biggest takeaways from this presentation, including key facts and statistics shared.
1. The NFT Market Cap is Less Than 1% of the Crypto Market
Although the market cap for NFTs reached an impressive $19.07 billion (USD) and roughly $320 million NFT sales were made in 2021, this is only a tiny fraction of the crypto market cap – 0.85% of it, in fact. 2022 data will show differently, but this is a very eye-popping statistic in and of itself.
This is due – in part – to the newness of NFTs. Since these digital assets are still in their early years of existence, there is still a lot of experimentation and volatility occurring within the NFT market. Additionally, despite the increasingly large pool of NFT projects, the greatest volume of success lies with only a handful of projects and investors.
However, as NFTs become more popularized, we will see more traditional investors and consumers begin entering into the space as well.
2. The Top 500 NFT Collections Account for 94% of All NFT Flips
NFT flipping is the practice of purchasing an NFT at a low cost and then selling it once it has accrued enough value. Currently, the top 500 NFT collections account for 94% of all NFT flips – despite estimates placing the total number of NFT collections at more than 80,000.
This means the greatest amount of value and investment security comes from these top 500 collections, rather than new or unfunded projects.
In addition to this, the most successful NFT flippers will flip an average of 2.5 more NFTs compared to the average seller. They will also spend around two times more money on NFTs, as well as buy higher-priced NFTs.
3. Utility & IP NFTs Likely to Become the Next Trend
According to Arreola, NFTs that can be used as avatar profile pictures (PFP) are the most common type of NFT currently on the market. However, Arreola predicts a shift in this trend as more useful types of NFTs are developed and released.
Specifically, intellectual property (IP) and utility NFTs will likely see a massive boom in popularity once the technicalities of developing them are sorted out.
IP NFTs will grant the rights to a piece of intellectual property, making it far easier to use and trade IP compared to traditional methods. Meanwhile, utility NFTs can be used for a variety of purposes, such as exclusive access to certain areas at events, admittance into clubs, unlocking future access, elements in gaming and entertainment, and more.
The major success and growth of NFTs despite representing less than 1% of the total crypto market makes the potential expansion of NFTs immense.
While the NFT space is still in its early days with its value concentrated in a small pool of collections and investors, this is highly likely to change as more projects attract the public’s eye. As more everyday consumers enter into the ecosystem, it will only continue to expand in value and vastness.
As you grow your own collection of digital assets and investments, it’s important to always ensure the security and future of your assets with the right tools and platforms. Webacy helps you backup your wallet (in case you lose access to your keys), trigger a killswitch in case you’ve been compromised, create a crypto will, define your inner circle of beneficiaries, and so much more. Click here to learn more and to join the waitlist