All sectors of the crypto and NFT industry were heavily impacted by the 2022 bear market. Many crypto assets, including Bitcoin, fell declined drastically within that period, reflecting the adverse effect of the bearish trend. Also, cryptocurrencies saw low trading volumes and market capitalization, impacting the global industry cap.
So it is not strange to discover a spill-over effect on the NFT market, as indicated in a new DappRadar report. According to DappRadar, Ethereum NFT market capitalization dropped in 2022. This report is not surprising, given that the market hasn’t recovered from the crypto winter.
Terra And FTX Implosions Led To NFTs Value Decline, Says DappRadar
In detail, the DappRadar report noted that the Ethereum NFT market cap recorded a 59.60% decline early this year. The market cap for 81 Ethereum NFT collections went from $9.3 billion at the start of 2022 to approximately $3.7 billion by the end of 2022.
DappRadar cited the May 2022 Terra Luna implosion as the primary cause of massive loss in market capitalization starting from June 2022. Per the explanation, the decline in the non-fungible tokens market cap was not due to a lack of investors’ interest but due to manipulations by bad players in the crypto space. It could also be the most probable cause of the woes of the broader crypto industry, which escalated with the FTX crisis in late 2022.
Around the time of the FTX collapse, the entire non-fungible tokens space experienced a heavy blow after the global crypto market took a hit. The chart below represents the performance of the NFT market against BTC, ETH, and SPX from January to December 2022.
Following the chart, there was a sharp decline in the NFT market from May down to December 2022, which also represents the period when the Terra collapse happened.
Outlook Of The NFT Market In 2023
DappRadar’s report also noted that a few NFT projects launched between 2021 and early 2022 experienced up to 260% growth in market capitalization. Some of these projects include the Azuki, Pudgy Penguins, and Degen Toonz collections, whose market capitalizations increased by 113.89%, 260%, and 204%, respectively.
Newer NFT projects that started after the Terra Luna collapse include the Potatoz, Renga, God Hates, and DigiDaigaku. Potatox’s market cap grew by 143.68%, God Hates NFT by 1,653.28%, Renga by 211.63%, and DigiDaigaku by the growth of 209.88%. These NFT collections observed an impressive increase even though Ethereum NFTs saw a nearly 60% decline in price over the past year due to the market downturn.
However, while other Ethereum NFTs declined, Bored Ape Yacht Clube collections dominated the market. The DappRadar report also suggests Yuga Lab’s Bored Ape Yacht Club (BAYC) NFT project dominated the Ethereum NFT market, becoming the leader in the NFT space.
BAYC collections accounted for up to 67% of the total non-fungible tokens market volume on Ethereum. However, even though Yuga Lab’s BAYC dominated the Ethereum market, its capitalization recorded a 64.92% decline from $2.6 billion in early 2022 to $934 million by the end of 2022. But despite this decline, Yuga Labs still acquired the two largest NFT collections in the crypto market; CryptoPunks and Meebits.