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The cryptocurrency market experienced significant volatility in August, with Bitcoin prices fluctuating widely. At the same time, the NFT market has seen a sharp decline, raising concerns about the future of this emerging industry.
Have we reached the bottom of the bear market? The good news for the industry has not stopped. Five Ethereum ETFs have submitted applications this month, and Hong Kong’s first cryptocurrency exchange license has been granted. However, bearish sentiment still prevails in the NFT market, with user activity and engagement declining significantly.
In this report, we will delve into the highlights of the NFT industry in August and explore the blockchain, trading market, and investment and financing dynamics in the NFT field. Despite the recent downturn in the market, we still find a glimmer of hope: innovative NFT projects continue to emerge, and they prioritize the real interests of creators and users, attracting people's attention and support.
The data for this report comes from Footprint Analytics' NFT research page. This page provides an easy-to-use dashboard containing the most key statistics and indicators to understand the latest developments in the NFT industry, updated in real time. You can find the latest information on deals, projects, financings and more here .
Key points overview
Crypto Market Overview
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In August, the value of Bitcoin fluctuated greatly, fluctuating between the lowest price of $23,664 and the highest price of $30,057 during the month.
NFT Market Overview
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In August, the NFT market experienced a significant decline; compared with July, transaction volume dropped by 21.7%; transaction volume dropped by 20.6%; and the number of independent users dropped by 27.4%.
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The blue-chip index is trending downward, indicating a more bearish sentiment in the market.
Public chain and NFT trading market
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After trailing Polygon for three consecutive months, Ethereum has regained its lead in the number of unique users.
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Blur's lead in transaction volume continued to shrink, falling from 52.5% to 48.3%.
NFT investment and financing situation
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The NFT market remained sluggish in August, with a total of 5 rounds of financing reaching a total of US$14.45 million.
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Although NFT investment and financing have been inactive recently, projects that embody innovation and prioritize the real interests of creators and users are still attracting attention and gaining support.
This month’s hot topic: royalties
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OpenSea announced that it will stop mandatory royalty fees from March 2024 and make them optional.
Highlights this month
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MasterExchange raises US$2.7 million in financing to complete first music release (IMO)
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NFT startup FirstMate received US$3.75 million in financing, led by Dragonfly Capital
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OpenSea releases redeemable NFT industry standard
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FingerprintsDAO partners with CryptoPunks creator Larva Labs to launch membership-based NFT series “Voxelglyph”
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Magic Eden launches US$1 million fund to cultivate blue-chip NFT series on the Polygon chain
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Sotheby's faces lawsuit for allegedly misleading and manipulating BAYC NFT sales
Crypto Market Overview
In August, the value of Bitcoin fluctuated greatly, fluctuating between the lowest price of $23,664 and the highest price of $30,057 during the month. On August 1, an application for 5 Ethereum ETH triggered a brief surge in the value of Bitcoin, reaching $30,000. However, the excitement was short-lived, with BTC and ETH prices quickly retreating due to market weakness following the U.S. government credit rating downgrade.
Source: BTC Price & ETH Price
On August 8, Bitcoin once again broke through the $30,000 mark, which may have been stimulated by the news that PayPal launched a new stable currency, PayPal USD (PYUSD). But Bitcoin took a sharp turn shortly thereafter, falling to nearly $25,000. The decline was driven by a series of negative events, including reports that SpaceX had sold off a large amount of BTC, the China Evergrande crisis, and a massive liquidation of $1 billion in a single day in the crypto derivatives market.
At the end of August, a U.S. appeals court ruled in favor of Grayscale in its lawsuit against the U.S. Securities and Exchange Commission, causing the price of Bitcoin to surge from $26,000 to $28,000 before eventually stabilizing around $26,000.
NFT Market Overview
In August, the transaction volume of the NFT market dropped significantly. The total transaction volume was $527 million, a decrease of 21.7% from July; the transaction volume was 1,119,066, a decrease of 20.6%; the number of independent users was 313,610, a decrease of 27.4%.
Source: NFT Market Overview
Recent market volatility has had a clear impact on market capitalization and trading volumes. The blue-chip index is trending downward, indicating a more bearish sentiment in the market.
The floor price of BAYC, the second-ranked blue-chip NFT, has continued to fall since January 2023. In August, it fell below 23 ETH, indicating that the bear market was still ongoing and more time would be needed to recover.
Source: NFT Market Cap & Volume
Source: BlueChip Index
These data indicate that the NFT market continues to slow down, with significant changes in user participation and investment activity. Like the cryptocurrency macro market, the NFT market is currently characterized by a lack of confidence and a risk-off mentality.
In August, the buyer/seller ratio in the NFT market was 131.63%, a decrease of 17.5% from July. There were 211,696 buyers and 160,822 sellers during the month. It is worth noting that compared with the previous month, the number of buyers fell by 29.4% and the number of sellers fell by 20.1%. During the month, the daily number of buyers and sellers remained relatively stable, except for a significant increase in the number of buyers on August 3.
Source: Daily Buyers & Sellers
On this day, the Polygon chain has the largest proportion of StarPass project buyers. According to PolygoScan , the largest holder with 62.7% of NFTs traded frequently at low or near-zero prices and royalties on August 3. However, in terms of transparency, the project has disclosed very limited details.
Source: NFT Buyer & Seller
Trends in daily unique users show a similar trend to daily buyers and sellers, with a positive correlation between the two.
Source: Daily Unique Users
Public chain and NFT trading market
In August, Ethereum continued to maintain its dominance in the NFT market, accounting for 97.8% of total transaction volume. However, overall Ethereum transaction volume fell 21.9% compared to July, totaling $515.2 million, reflecting the downward trend in the entire NFT market.
Source: Monthly Volume by Chain
The number of unique users on Ethereum was 147,140, a decrease of 10.7% compared to July. Notably, after trailing Polygon for three consecutive months, Ethereum regained its lead in the number of unique users.
Source: Monthly Unique Users by Chain
In terms of the NFT trading market, Blur’s lead in trading volume continues to shrink, falling from 52.5% to 48.3%. On the contrary, LooksRare had an upward trend during the same period, increasing its market share from 11.3% to 14.7%.
Source: Monthly Volume by Marketplace - Distribution
OpenSea still maintains its leading position in the number of independent users, with a huge user base of 268,300. However, the industry has seen a decline in overall user activity, resulting in a decrease in the number of users using the platform.
Source: Monthly Unique Users by Marketplace
The NFT market has entered a period of adjustment, which provides the industry with valuable opportunities to deeply explore innovation and upgrade its products.
OpenSea is actively promoting the establishment of industry standards for redeemable NFTs. On August 28, OpenSea released its standards and roadmap for redeemable NFTs through a blog post . A redeemable NFT has inherent value or utility and can be "redeemed" to obtain another NFT, whether it exists on-chain or off-chain. These initiatives enable creators to build closer connections with their communities, promote more immersive member experiences, and unlock new applications of Web3 technology. Well-known examples of redeemable NFTs include PUMA x Gutter Cat Gang’s GutterMelo, Invisible Friends Physical Collectibles, and Creature World’s Crowd Phase 3. Generally speaking, the process of acquiring a new NFT via redemption involves destroying the original NFT. However, OpenSea's groundbreaking standards and user experience transcend this traditional approach. It introduces the concept of feature redemption.
Source: Invisible Friends - OpenSea
Redeemable NFTs are one of the most exciting applications of NFT technology, but they lack a standard. OpenSea has released four improvement proposals (ERC-7496, ERC-7498, SIP-14 and SIP-15) and is actively seeking community feedback and partners to drive future projects.
NFT investment and financing situation
Similar to last month, the NFT market remained sluggish in August, with a total of 5 rounds of financing reaching a total of US$14.45 million.
Music investment marketplace MasterExchange has raised $2.7 million in start-up funding from investors including Hong Kong-based venture capital firm Vectr Fintech and Pan Capital CEO Claes-Henrik Julander.
MasterExchange provides an Initial Music Offering (IMO) system similar to an Initial Public Offering (IPO) for notifying investors of potential song investment opportunities. Any beneficiary of copyright benefits, including artists and music labels, can initiate an IMO on the MasterExchange platform. Investors who buy a share of the rights to a song can receive revenue generated from its use, such as streaming or commercial specials. MasterExchange provides comprehensive investment prospect information for every song, prioritizing transparency to enable users to make informed decisions.
Source: MasterExchange Website
This innovation allows music lovers to interact with their beloved music in a novel and engaging way through NFTs. It provides creators with the opportunity to sell a portion of their future earnings, thereby fueling artistic creation.
DRiP, an NFT issuance platform on the Solana chain, successfully received US$3 million in seed round financing, aiming to accelerate the development of collectible content and Web3 social platforms. DRiP enables creators to send weekly digital gifts to supporters. DRiP's signature event is Showcase, a free art release curated by the DRiP team showcasing the work of artists, animators, musicians and other creators on Solana. Previous works include bunjil's Solana Spaceman, Flag Monkez's RIVALS, Peblo's The UP Only Cet and Daramola's Metropolis.
Source: DRiP Website
FirstMate, a startup dedicated to providing a digital storefront for NFT creators, recently successfully completed a $3.75 million round of financing. The round was led by Dragonfly Capital, with participation from Coinbase Ventures and NextView. Unlike traditional marketplaces, FirstMate prioritizes the needs of creators by providing a unified platform. On this platform, artists can showcase all their works regardless of their origin. Additionally, FirstMate gives artists complete control over royalties, ensuring they have complete control over their creative activities.
Source: FirstMate Website
Although NFT investment and financing have been inactive recently, projects that embody innovation and prioritize the real interests of creators and users are still attracting attention and gaining support. While the overall market may have experienced a slowdown, there are still noteworthy endeavors amid the challenges. These projects not only bring novel ideas to the table, but also have an unwavering commitment to creator empowerment and creating value for users. As the market adjusts and evolves, these innovative efforts serve as inspiring examples, demonstrating that with the right approach and enough effort, there are still opportunities for growth and success in the NFT space.
This month’s hot topic: royalties
On August 18, OpenSea announced that it would stop mandatory collection of royalties starting from March 2024 and make it optional. The decision highlights a shift in the market as major trading markets will no longer require mandatory royalties. For example, marketplaces like Blur and LooksRare have adopted optional royalty models, while SudoSwap has implemented a zero-royalty strategy.
Source: OpenSea Twitter
OpenSea's decision prompted a variety of reactions. Those who support the move see it as an important step toward finding a balanced approach that benefits both creators and buyers while meeting the diverse needs and preferences of participants in the NFT ecosystem. However, Yuga Labs (BAYC creators) responded to OpenSea’s decision by announcing that they would block trading of their new NFT on the platform.
This announcement from OpenSea sent shockwaves through the NFT community, sparking discussion about its potential impact on creators and the entire NFT ecosystem. As the NFT market continues to evolve, finding the right balance between attracting sellers, ensuring fair compensation for creators, and maintaining a competitive advantage will be a delicate task.
The above research report data includes:
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Chain: Ethereum, Polygon, BNB Chain, Cronos, Optimism
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Trading Markets: OpenSea, LooksRare, Blur, X2Y2, Cryptopunks, Rarible, SuperRare, Foundation, Decentraland, Aavegotchi, Element, Era7, the Sandbox, Minted
This article was contributed by the Footprint Analytics community.
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