NFT Market Falters: Collections Lose Over Half of Market Cap in 2022

In 2022, the effects of scammers and market influencers could be seen in the crypto, as well as in NFTs. Those NFTs released after the beginning of the crypto winter experienced better performance.

Analysis of 81 NFT collections on the Ethereum blockchain revealed a prominent decrease in total market capitalization in 2022, as outlined in a report by DappRadar issued on 9 February. Nonetheless, the deficits were not similarly allocated.

DappRadar reported that the Ethereum NFT market began the year on a value of $9.3 billion before dropping to $3.7 billion by the end of 2022, resulting in a decline of 59.6%. It is paramount to remember that ETH experienced a 60% decline in price over the same period of time, heavily impacting the value of NFTs.  It is worth noting that such a rapid decrease was not indicative of NFTs becoming less useful, instead it was due to bad actors and market interference.

In 2022, Yuga Labs occupied the majority of the market (two-thirds), with their CryptoPunks and Bored Ape Yacht Club collections alone comprising 46.7%. With a decline of 86.15%, the Otherdeed collection was Yuga Labs' loss leader.

The three collections of Azuki, Pudgy Penguins, and Degen Toonz that were launched either in 2021 or the beginning of 2022 saw a remarkable increase in market capitalization, with the rise of 113.89%, 260%, and 204%, respectively.

Collections established following the fall of Terra experienced more success, with Potatoz increasing by 134.68%, Renga going up by 211.63%, DigiDaigaku gaining 209.88%, and God Hates NFTees seeing a remarkable 1,653.28% surge.

The report suggested that, in the space of a year, collectibles had gone from dominating over 90% of the NFT market to representing less than 75% of it. It also revealed that there was a total trading volume of $870 million for NFTs in January of 2023.