NFT Markets Need Revival
The NFT market experienced an up-and-down period between January and May 2022, from a bullish period in January to a phase of stabilization and consolidation between March and May. According to a report prepared by Huobi Research Institute, the current market stagnation... The current market stagnation, according to the report by Huobi Research Institute, indicates that the NFT market's inability to match the ever-increasing NFT collections and projects is largely due to a lack of new demand.
The NFT market experienced an up-and-down period between January and May 2022, from a bullish period in January to a phase of stabilization and consolidation between March and May. According to a report prepared by Huobi Research Institute, the current market stagnation indicates that the NFT market's inability to match the ever-increasing NFT collections and projects is largely due to a lack of new demand. The report states that without consistently high demand, newly released NFT collections affect the market and divert capital away from older collections. The report also emphasizes that tools and platforms need to be developed to protect buyers from cash-grab projects and wallet scams for the market to remain sustainable and attractive to investors. The report titled "2022 NFT Market Trends (January-May)" examines the ups and downs in the NFT market this year and highlights how new, popular NFT collections successfully ignited interest in NFTs. Such new projects attract high-volume new and returning buyers to the market, similar to the market activity in January, where PhantaBear and other leading Asian NFT projects heralded NFT buyers from wealthy Chinese-speaking markets in Asia. The sudden influx of buyers caused market demand to exceed supply, and thus raised the floor price of almost every NFT collection. However, opportunistic project teams saw this phenomenon as an opportunity to profit and launched low-effort, low-quality projects for quick money-making schemes that exploited the naivete of buyers. Such actions by creators resulted in a large outflow of capital and liquidity; buyers also lost money from scams, hacks, and low-quality collections that depreciated in value. Consequently, NFT demand fell, and public confidence was shaken. From March to May of this year, new collections continued to emerge, but these projects did not attract new buyers to the market, and buyers' interest in NFTs remained low. However, new collections continue to be demanded by existing NFT sellers who own other NFT collections. The current state of the market is one where users sell their old NFT collections to raise capital to buy new ones. These new collections have muddied the existing market and increased the selling pressure on old NFTs. The NFT market is still full of hacks and money-grab projects, and if the masses continue to view NFTs as scams and high-risk assets, consumer confidence and public interest in NFTs will not increase. The report predicts that the trend of selling low-quality projects will continue, and the market will see an alternating shift between low-quality projects and top-quality projects. A period of market consolidation and reform is needed to regain public interest and trust in NFTs. Hanson Chan, Researcher at Huobi Research Institute and author of the report, said, "We hope to see the NFT market become a healthier and safer space with responsible projects that keep their promises to NFT owners, standardized UX designs for smart contracts, and screening platforms to protect NFT buyers from unethical project developers. Sellers and collectors should evaluate the current state of the NFT market to make informed decisions moving forward." This article is an excerpt.