NFT Sales See Renewed Gold Rush

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The NFT market seemed to subside in the past months, after peaking in the April-May period. But the renewed trend saw some of the leading projects outperform, boosting total primary and secondary sales to the $300M mark. 

The most recent peak in NFT sales is driven by the older CryptoPunks collection, with a boom in demand for Axie Infinity (AXS) and the Axies characters. 

Axie Infinity is a project that expanded recently, with significant adoption in the Philippines and a growing online community. At the same time, the CryptoPunks images and NFTs are becoming iconic, rising on the renewed uptrend of BTC and ETH prices. 

How the NFT Market is Performing

The NFT market showed almost no activity for years after the initial hype surrounding CryptoKitties. For years, the market moved with almost no volumes, until the appearance of several highly popular collections. 

The market also got a boost from the sales of artist Beeple, who is still the holder of the record for the most expensive NFT, “The First 5000 Days”, valued above $60M.

Other notable NFT artists include long-time crypto celebrity Pascal Boyart, who is now selling parts of his large-scale murals as NFTs. 

Exposure outside the world of crypto projects is also happening through Christie’s auctions, which launched their digital art branch in May and now perform NFT auctions.

There are few tools to measure the whole size of NFT sales, as they happen through multiple networks and platforms. But the most active Ethereum-based collectibles are on track to reach weekly volumes close to $300M. The average NFT sale value is also going vertical in the past few weeks, and has surpassed $30K. 

There are myriads of tokens that are not rare enough to command those prices. But a rare CryptoPunk or another collectible can be seen winning auctions at those rates. 

Axie Infinity Drives Low-Cost NFT Adoption

The Axie Infinity project combines crypto collections with a popular adventure game. Axis as NFTs trade as either character packs for the game, or as crypto art that is outside the game and available on the OpenSea platform. 

The Axie Infinity project, however, has an additional dimension of speculative trading. The value of AXS is a source of fast, but volatile gains. AXS broke a record above $53 last week, then moved down to the $41 range. 

SLP, the secondary token used to breed Axies for the game, lost about 30% of its value and is down to $0.20. The future of the project is unknown, and for now the high trading volume and value are not immediately reflected in the market price of the assets. 

Are NFT Airdrops Really Free

The growing popularity of NFTs has sparked a series of airdrops, promising high potential returns for virtually free images and tokens. However, the actual price to be paid is hidden. Minting NFTs requires a significant gas payment to compete with bots and other competitive participants. 

In the past weeks, this has led to multiple congestions of the Ethereum network, with potential owners sometimes paying exorbitant gas fees for transactions that never get completed. And while NFTs promise a low-cost investment for the token itself, gas prices may be unpredictable and exorbitant.

So I went to mint my first NFT and the gas price was .64 eth like a $1700 fee 🤣

— Pool Guru (@JohnsCardBreaks) July 31, 2021

One of the most recent popular airdrops, Stoner Kitties, led to a highly competitive minting spree, where bots and users raised fees significantly. Often, the value of the NFT is as high as the minting gas fee, creating a barrier to entry. Investing in NFTs thus requires significant upfront costs, and is now a low-price entry point for adoption. This may limit interest from newcomers, or move it to NFTs on cheaper networks and less prominent projects.

CryptoPunks Drive the Secondary Market

The NFT market shifts between hype for new projects, and a return to the secondary market. CryptoPunks have boosted the secondary market sale in the past week, steeply increasing the value and volume of transactions. 

Initially distributed as an airdrop, rare CryptoPunk images now command significant valuations. An auction is open for CryptoPunk NFT tokens and images with a price tag of 2,250 ETH, or around $5.5M. 

In the past week alone, CryptoPunks have moved more than $88M, with a total sale over time above $493M. This is still a relatively smaller market compared to pure coin and token trading and decentralized finance. 

Gas Fees May Shift the NFT Equation

The high gas fees getting paid for NFT minting have become one of the incentives for ETH miners. But in just a few days, the EIP-1559, known as the London hard fork, will dramatically shift fee distribution. 

Instead of being paid to miners, fees will be burned, with the intention of diminishing the ETH supply. In July 2021, between 35% and 50% of miners’ revenues are from gas fees, and the hard fork on August 4 will cut into that haul significantly. It remains to be seen if the fees for the regular NFT user and small-scale buyer will trend down. 

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