6 Feb 22 – Trends & Insights

A slowing NFT market after a bullish start this year

Having covered most of the basics on NFTs, I found myself networking with more people in the space, consulting on projects, and making my little bets. Hence, I'm starting a new fortnightly column to share some trends and insights on the NFT market.

After a bearish and seemingly permanent bear market in November and December 2021, we were off to a bullish start this January. It's almost as if we took a 180 degree turn on 1 January. Floor prices soared as all collections, major and small projects, took off at astonishing pace. Most of us reasoned it to a year-end sell-off for tax write-offs, and it's merely capital flowing back into the markets.

The hot momentum also gave an insight as to what was trending, what people are bullish about this year. While the August 2021 bull run was marked by animal PFPs (almost anything with an adjective followed by an animal name), the trend has since wore off. Here's the trend we see in January 2022.

Trending NFT Categories

1. Asian Projects

Ghozali and IreneDAO are probably the ones that most people hear about for they've hit mainstream news. Nevertheless, those tend to be more frivolous projects that are likely a case of pump and dump.

Then there are Asian-created collection that got picked up, like 8sian, Phantabear, Innocent Cats, X Rabbit Club. It's almost as though a project started by some Chinese, with a certain amount of following, draws the attention of the west and everything just goes up.

Upcoming projects like Ali & Friends, and Rain Boy Club can be telling is this was just a passing fad or a continuing trend.

2. Women-led Projects

This was never a new thing. Women-led projects that are encouraging more women to step into the space. I'm acquainted with some of them and I think what they're building is brilliant.

Having said that, the rise in WoW (World of Women) also lifted the rest of the boats – Boss Beauties. Women and Weapons, Crypto Coven, Flower Girls, and so much more.

The key thing to look out for is a prominent female founder, who's well connected and genuinely building a community that supports women. But given that it can become a marketing angle, be sure to join their Discord and see if the interactions are genuinely fostering or is the project masquerading as a women-positive one.

Personally, I rely a lot on WoW Pixies DAO – a project that spends its treasury on other women-led projects by means of community decisions. Should the NFT market continue to grow, this project will likely grow in value too.

3. 3D avatars tied with a Metaverse

HAPEBeast was the biggest project. Then there are Lil Heroes, Oxya Origins, and C-O1.

While most of these projects have managed to sustain above mint price, they have all taken a significant correction post-reveal. The main reason for that drawback is the projects tend to overpromise (on the art especially) and when the interest waned, their floor prices crashed as well.

Be very wary when it comes to such project, because all of them can promise the same utility. In reality, quality projects are hard to come by, which is why I appreciate what RTFKT has done and are doing. This is my biggest bag that I'm not afraid to shill because it's leading the front on every aspect but is honestly quite expensive now.

4 Anime NFTs

I was never expecting this to run. Having seen 0N1 and Sevens launched and flopped, I expected little to no fan fare.

Yet Azuki proved me totally wrong, soaring to "blue-chip status". I'm careful about labelling projects as blue chips given the nascency of the space, and urge you to do so if any one tells you a project is blue chip worthy.

Other projects had a soaring start but it became obvious when the team and communities aren't there to build an everlasting brand, and prices just plummeted after reveal. KillerGF, Lives of Asuna. Muri, Haki, Tsuki, and a ton more upcoming ones. I think it's about time anime artists get the attention and pay they deserve. At the same time, it seems like a fad that will pass really fast.

5. Games And Land NFTs

These are two areas that I don't really dabble in. For me, games are good but I'm never certain about their longevity. As for land, while DCL and SAND are the key players, it's interesting to watch how new projects eat into the space but I haven't quite wrapped my head around the play yet.

World Wide Web NFT has shown great potential in attracting users, and creating a game for players to complete quests and earn Whitelist spots. Illuvium and Big Time are highly anticipated. As for how these worlds might be interoperable or whether there will be a monopoly or duopoly of systems, it's still really hard to tell.

Insights And Forecast

Almost as scary as the crypto crash was, BTC, ETH and most cryptocurrencies have recovered to healthy levels. This has also prompted NFTs to some form of pullback from seeing the falling floor prices. Further, there is considerable drop in trading demand and more projects are failing to mint out.

While these signals might point to the start of a bear market, there is still a healthy amount of buying demand and activity in the space. Sentiments are definitely not as bearish as it was in Q4 of 2021. Should there be a resurgence in NFT interest, it'll be interesting to see if any of the trends above ensues. Also there are two areas I'm looking at:

  1. Independent artist-led PFPs

  2. Generative art

Many of the top projects have a team of artists. Then, there are some projects with a single artist, who have created a whole series of PFPs but they are not selling as well as expected.

I believe this hinges on whether the artist is there to build an ecosystem, or just there to sell art. The latter will probably lead to a stagnating or slow-growth project as NFT investors are impatient degenerates who can't stand seeing their ETH do nothing. With an ecosystem, there should be engaging activities for fans e.g. a Metaverse, its own game or tokenomics, utility etc. However, this would require the artist to reinvest a significant amount he raised as opposed to keeping the ETH as his compensation for his art.

As for generative art, I'm still in the exploratory phase but reckons it has a lot to do with the universal appeal of the art, the provenance and activeness of the artist in the space, as well as the presence of prominent collectors as a social signal. I hope to share more of this in future.

Overall, most of us are still anticipating CoinBase NFT to bridge mainstream adoption. While Facebook has gone Meta and their Diem project has since been forced to shut, it's interesting to see if NFTs can lead to mainstream adoption of cryptocurrencies.

Whereas previously, the strongest use case for a digital currency is an alternative, decentralised, trusted currency, NFTs might be a game changer. Because now we have a digital product in NFTs that ties into so many real world applications – and if cryptocurrencies are the required intermediary for transacting these digital products, wouldn't that make cryptocurrencies as a whole more relevant than before?

Could NFTs bring crypto into its super cycle? Or will broader macro themes cause the rise/demise of crypto?