June NFT Monthly Report: Market at Standstill, Growing Interest Among The Masses, and Azuki's Downfall
Author: lesley@footprint.network
In June, the crypto markets experienced a notable upswing, with Bitcoin, in particular, surging to a 12-month high of $31.2k. However, the NFT market did not share the same momentum, as data indicates a relative stagnation in user activity and funding.
Nevertheless, there is an underlying stream of evolution within the NFT space. NFTs are beginning to shed their image as mere digital collectibles. A growing number of brands and industries are experimenting with NFTs, such as Louis Vuitton, leading to a diversification of their applications.
The NFT space hasn’t been without its share of controversy. Azuki, known for its anime-style NFTs, launched its new series, Azuki Elementals, to a rocky reception. The community criticized the lack of originality and innovation in the new series, and this incident highlighted the importance of value creation and community engagement in the success of NFT projects.
Data of this report was obtained from Footprint’s NFT research page. An easy-to-use dashboard containing the most vital stats and metrics to understand the NFT industry, updated in real-time, you can find all the latest about trades, projects, fundings, and more by clicking here.
In June 2023, the Bitcoin market (BTC/USD) experienced a significant development, reaching a 12-month high of $31.2k on June 22nd. This milestone indicated a sustained upward trend in the volatile cryptocurrency landscape.
On June 5, the U.S. Securities and Exchange Commission (SEC) increased its scrutiny of leading cryptocurrency exchanges such as Binance and Coinbase. As a result of these regulatory actions, bitcoin experienced a downturn, with its value dropping to $24.7k.
However, a significant shift occurred on June 22, when Bitcoin defied expectations and surged past the $30k milestone. By the end of June, Bitcoin closed at $30.4k, demonstrating that the $30k level is now serving as a solid support. This remarkable performance may have been influenced by positive news in the crypto space, such as Blackrock’s filing of a spot bitcoin ETF, which likely boosted market optimism.
This consistent performance suggests a period of consolidation within the market, highlighting bitcoin’s resilience in the face of regulatory turbulence and a cascade of market news.
The market has cooled down and there hasn’t been any significant fluctuation in market cap compared to the previous month. On June 1, the market capitalization was 38.38 billion, and on June 30, it decreased slightly to 35.86 billion.
In terms of trading volume, the NFT market experienced fluctuations throughout the month of June. On June 1, the trading volume was 26.20 million, which dropped to 16.59 million by June 18. However, by the end of the month, on June 30, the trading volume rebounded to 35.86 million. The highest trading volume was recorded on June 27th, reaching 61.45 million, largely due to Azuki, which alone accounted for 20 million in trading volume.
NFT Volume by Collection on June 27
On June 28th, a series of incidents involving Azuki Elementals led to a spike in trading volume, mainly driven by selling. The number of sellers was twice the number of buyers for the Azuki series that day. This indicates that there was a significant sell-off, possibly due to the market’s reaction to the Azuki Elementals incidents.
Such spikes in trading volume, especially when attributed to specific events or collections, highlight the sensitivity of the NFT market to news and developments. It also underscores the importance for investors to stay informed and exercise caution in a market that can be highly volatile.
In terms of user activity, the NFT market has remained relatively stable with approximately 30k active users. However, this number represents a continued decline in user activity compared to earlier in the year. In particular, compared to the peak on January 27, when there were 129.39k active users, current user activity is approximately a quarter of that peak.
Indeed, despite the slowdown in the secondary market, the NFT space continues to explore and expand into different application areas, demonstrating its versatility and potential. For example, Louis Vuitton’s launch of a high-end “Treasure Trunk” NFT collection, priced at €39,000, represents a fusion of luxury fashion and digital collectibles.
A rendering from the Louis Vuitton digital Treasure Chest NFT collection
In addition, the Bored Ape Yacht Club’s (BAYC) foray into the entertainment industry with an influential movie deal signifies the potential of NFTs in content creation and intellectual property. This could herald a new era in which NFTs play a central role in content licensing, royalties and creative collaborations.
These developments show that NFTs are not just digital collectibles, but can help revolutionize multiple industries. As more brands and industries experiment with and adopt NFTs, we can expect to see a broader range of applications and use cases beyond the traditional art and collectibles space. This diversification could be a key driver for the next wave of growth in the NFT market.
Ethereum’s dominance in the non-fungible token (NFT) market, with a significant 97.7% share of total volume in June, underscores its preeminent role as the platform of choice for NFT transactions. This dominance is not static, but constantly evolving, with Ethereum’s market share increasing slightly each month through 2023. This trend suggests that users rely on Ethereum for high-value transactions, especially during bear markets.
This preference may be due to Ethereum’s established reputation, proven security, and technical capabilities, all of which are essential to the functioning of NFTs.
Over the past three months, Ethereum has not only maintained its dominance in NFT transactions, but has also seen a gradual increase in the proportion of unique users. This is particularly noteworthy given the availability of alternative blockchains that offer lower transaction fees. Despite the cost-saving incentives of these alternatives, users continue to prefer Ethereum for their NFT transactions.
When it comes to daily trades, Ethereum still leads the pack, but Polygon and Solana are not far behind, taking second and third place respectively. With Ethereum accounting for 50.34% of the trades, Polygon at 28.38% and Solana at 10.92%, it is evident that Ethereum’s dominance is not as pronounced in terms of trade quantity as it is in terms of trade volume.
While Ethereum remains the dominant player, the significant volume of trades on Polygon and Solana suggests that these platforms are also major contenders in the NFT space. They appeal to smaller traders who are attracted by lower transaction fees and faster transaction times.
Despite the BNB chain’s underwhelming performance in terms of trading volume, its high wash trading rate, which was 42.14% in June, the highest among the chains, is a striking revelation.
Wash trading, which involves the simultaneous buying and selling of the same asset to artificially inflate trading volumes, can create a misleading perception of market activity and liquidity on the BNB chain. Specific projects such as Pentas NFT, Alpaca Finance NFT, and Binance Regular NFT have wash trading rates in excess of 90%.
In terms of transaction value, Blur has consistently dominated the market, accounting for nearly 70% of the value in June. Another major player, OpenSea, which accounted for 22% of the value of the NFT market, launched OpenSea Pro in April, targeting professional NFT traders. However, the data so far does not show a significant impact on Blur’s dominance in terms of transaction value.
However, when analyzing the market in terms of number of transactions and user base, OpenSea continues to lead with nearly 70% of the market.
When we examine Bored Ape Yacht Club (BAYC), which has the highest volume on both Opensea and Blur, we find a striking discrepancy. BAYC’s volume on Blur is 24.6 times that on Opensea, but the number of buyers is only 1.86 times greater. This suggests that while Blur facilitates a greater volume of transactions, the actual number of unique buyers involved in those transactions is not proportionately higher.
While Blur may be the preferred platform for high value transactions, OpenSea remains the preferred platform for a larger number of users and transactions.
In addition, a significant portion of Blur’s volume is concentrated in a small number of wallets. Specifically, less than 300 wallets account for 53.79% of Blur’s total volume. In contrast, for Opensea, the same percentage of volume is spread over a much larger number of wallets, with only 17.04% of the volume coming from the top wallets.
This suggests a higher level of concentration among top buyers on Blur compared to Opensea, which could indicate that a smaller number of high-volume traders or investors are driving much of the market activity on Blur.
Volume v.s. Wallet Address
The funding market in the NFT space has cooled this month, with only two major fundraisings taking place. This significant reduction in funding activity may indicate increased caution among investors, possibly due to market uncertainties, regulatory concerns, or a realignment of investment priorities.
Among the funding activity announced on June 24, Mnemonic, which specializes in AI-powered NFT data and analytics, successfully raised $6 million in a seed extension round. The round was led by Salesforce Ventures.
At the same time, Hook, a platform focused on building an NFT-native options protocol, secured $3 million in funding on June 28. Hook’s protocol aims to create new revenue and hedging opportunities for NFT holders, which could be a game changer in the NFT financial ecosystem.
Monthly NFT Projects Fundraising Amount & Times
The financing industry related to NFT has been on a downward trend since January 2022, with June marking a particularly low point in terms of investment activity.
Despite the cautious approach of investors, it is noteworthy that builders and developers remain active even in a bear market. This persistence in building and innovating during a downturn is indicative of the underlying belief in the potential of the NFT space. It is this continued evolution that can lay the foundation for the next wave of opportunity in the NFT sector.
As history has shown, markets are cyclical and the current cooling off period could be followed by a resurgence. When the next bull market arrives, the groundwork laid by these builders during the bear market could catalyze a new era of innovation and investment in the NFT space.
Azuki, a brand celebrated for its distinctive anime-style NFTs, had a rocky start with its new series, Azuki Elementals. The community’s initial enthusiasm quickly turned to disillusionment and criticism.
A major point of contention was the alleged lack of originality in the Elementals collection, with community members pointing out striking similarities between the new Elementals and Azuki’s previous NFTs. For a community that likely had high expectations for fresh and innovative artwork, this was a disappointment.
Additionally, the minting process was marred by inconsistencies. While some holders were able to easily mint NFTs, others faced barriers that prevented them from participating. Adding fuel to the fire, the lack of minting limits during the pre-sale period allowed certain individuals to mint a unlimited number of Elementals.
By the end of the month, the Azuki floor price had dropped significantly to around 7 ETH. Similarly, the floor price of Azuki Elementals fell below its mintage price of 2 ETH. Elementals sparked a wave of selling that led to a sharp drop in prices. This in turn contributed to a chilling effect on market sentiment.
This situation highlights the importance of value creation and community engagement in the NFT space. If a project is perceived as lacking innovation or fairness, as was the case with Azuki Elementals, it can lead to a rapid loss of confidence and value.
This piece is contributed by the Footprint Analytics community.
The Footprint Community is a place where data and crypto enthusiasts worldwide help each other understand and gain insights about Web3, the metaverse, DeFi, GameFi, or any other area of the fledgling world of blockchain. Here you’ll find active, diverse voices supporting each other and driving the community forward.
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