Feb 21, 2023 - Economy

NFTs are down, but they're not dead

Illustration: Shoshana Gordon/Axios

The market for NFTs has gotten smaller. But it hasn't died.

Why it matters: Despite the societal and media urge to eulogize the fall of any once-big thing, more than $480 million worth of NFTs exchanged hands in the past 30 days. Perhaps more importantly, the market is changing in a fundamental way.

The big picture: From the beginning of the NFT (lesser known as "non-fungible tokens") boom in early 2021, the issue that's held the marketplace back has been liquidity.

  • It's hard to truly know an asset's "value" when a person can't sell it quickly when they want to.
  • Lately one marketplace, Blur, has been trying to change that, catering to people making a living day trading NFTs.

Zoom in: Blur's entire design is based on the idea that some traders want to buy or sell a bunch of NFTs from a single collection at once, something called "sweeping the floor."

  • Sweeping would be like snatching up 20 Picasso paintings sight unseen, instead of obsessing over Guernica — before Picasso really became a thing.

Be smart: If more traders are sweeping the floor, that increases the likelihood that cheap NFTs just sell, which makes the value of all NFTs more "real."

State of play: Blur, which only launched in October, is winning the market for vibes. It now has about 40% of the retail NFT market, coming out of nowhere in October.

  • It raised $11 million a year ago, and is rumored to be raising now at a billion-dollar valuation.
  • OpenSea, the market leader, remains the market leader, and is still basically the homepage of this asset class.

The bottom line: While the frenzy has come out of the NFT market, it's not escaped the notice of many hungry young investors that there's still more than enough money sloshing around the market to make a buck.

  • Yes, it used to do billions of dollars a month in volume and now it's mere hundreds of millions. It's still a lot of money.
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