NFT Market | 2022 Year-In-Review | Trends to Watch in 2023

Introduction

2023 has begun and it's time to reflect on the upcoming trends that will define the NFT market in the upcoming 12 months. To understand the future of NFTs, we have to look back at what happened in the last 12 months. After gaining mass popularity, the NFT Market faced a significant downtrend. At the beginning of last year, we saw an overflow of positive news! Trading volumes were high. Creators and traders were making continuous gains. But the bull run for NFTs ended after the market began to cool down in Q2. The dream of a moon shot for retail investors popped due to multiple events like the crash of Luna, Celsius, Voyager, and FTX, which influenced the collapse of the crypto market. This caused the NFT sector to drop in value, marking the end of a golden period for NFTs.

Despite the crypto market crash, brands used NFTs to build communities, raise capital, and contribute towards developing a decentralized Web3. Now that 2022 has ended, we'll look at the most relevant insights of the year, which shaped the NFT market.

In this report:

• The Biggest NFT Moments of 2022
• Market Overview
• Total NFT Trading Volume in 2022
• Type of NFTs by Popularity
• Marketplace Market Share Distribution
• Global Interest in NFT
• Top NFT Collections of 2022
• NFT Trends for 2023

The Biggest NFT Moments of 2022

• Top Celebrities & Moonpay promotion on Bored Ape Yacht Club - January
• Deepak Thapliyal boughtCryptopunk #5822 8,000 ETH (then $23.7 million) - February
• NFT commercials took over Super Bowl LVI - February
• Pixelmon Reveal goes wrong, blows out on social media - February
• Yuga Labs acquires CryptoPunks - March
• Apecoin DAO airdrops millions worth of $APE to Holders - March
• Solana NFTs soar and get exponential trading volumes - March
• Instagram incorporates NFTs - May
• Moonbirds NFT flying from 2.5 ETH to 30 ETH - May
• Yuga Labs' first trip to Otherside Metaverse - July
• Hackers stole $620 million from Axie - July
• Ethereum merge - September
• Reddit NFTs reach millions of new users - October
• Creator royalties debate on marketplaces - November
• Fifa WorldCup NFTs become popular among fans - November
• Donald Trump NFT collection sells out - December

Market Overview

Yearly Change: Bitcoin: $16,600 (-65%) | Ethereum: $1,200 (-68%) | Solana: $9.81 (-94%) | Polygon: $0.78 (-68%)

NFT Total Trading Volume in Marketplaces:

The NFT Market reached its highest point at $35 billion in March. Currently, the market capitalization stands at $21 billion, which represents a 40% decrease. While the market saw a slowdown towards the end of the year, it has experienced significant growth since the start of 2021, when the market capitalization was only $91 million.

The total trading volume reached its highest point in the first half of the year, with a weekly total of $1.3 billion in April. However, this number decreased by 91% by December to $115 million. Despite the decline, the current weekly total represents a 340% increase compared to the $25 million recorded in January 2021. The market has established a base of holders and creators, which might serve as a solid foundation for growth in the upcoming years.

NFT by Category:

2022 was a significant year for digital communities derived from the NFT market, with the popularity of Profile Picture NFT collections leading the way. These were followed closely by digital collectibles. Art and gaming ranked as the third and fourth most popular categories.

Marketplace Distribution:

OpenSea dominated when it came to market share. In Q3 of 2022, marketplaces such as Blur, X2Y2, LooksRare, and Magic Eden gained popularity. Blur surpassed OpenSea in Q4, reaching 52,000 ETH (roughly ~$60 Million) compared to OpenSea's 13,000 Ethereum (~$15 Million).

Global Interest:

The overall interest in NFTs can be seen in the declining daily searches for the term 'NFT' on Google. This trend suggests that fewer people are searching for information about NFTs, indicating a decreased interest in the technology.

Top NFT Collections of 2022

Yuga Labs dominated the NFT market, taking four out of the top five spots on the list, making them the market leader in the last 12 months, followed by Azuki, Moonbirds, and CloneX. Additionally, we saw other collections that gained significant popularity, such as Goblin Town, Nouns, Pudgy Penguins, and Reddit's collectible avatars.

NFT Trends for 2023

It's already the start of a new year and it looks like it's going to be an exciting one for the crypto and NFT markets. As we move forward into the next 12-24 months, we expect to see several trends that could potentially experience exponential growth (and profit opportunities). NFTs are still in their infancy, and the market will continue to mature as new applications for this technology come to use. In 2023 we expect to see an increase in the number of creative and innovative applications for this technology.

• AI in Web3: artificial intelligence applications have captured the eyes of the internet in 2022, and the rate at which this technology is being adopted is rapidly growing. Decentralized applications and Web3 projects that embrace AI to deliver tools will have a bright 2023. NFTs have proven to be an effective way for businesses to raise capital while retail investors get ownership over a project. As a result, we expect to see the release of NFT projects that support AI-based applications.

• Interactive NFTs: being creative plays a significant role in the success of NFT collections. Projects that allow its users to interact and combine NFTs in a fun and gamified manner are gaining popularity, and they might be a way to attract retail investors. An example of this is Murakami's Cat Coin Game which allows users to combine NFTs to generate new, with the thrilling factor of luck.

• Japanese NFTs & Anime: Anime-based NFTs have risen in popularity in the last year. As a result of this increasing demand, we expect to see a number of new NFT projects focusing on anime being launched in the near future. These projects are likely to target the broad audience of digital collectors in Japan, where anime is particularly popular. We expect these projects to offer a wide range of anime-themed NFTs, including collectible characters, limited edition artwork, and other story-based collectibles.

• Gaming: NFTs and gaming show great potential for the upcoming years, and 2023 might be the year they take off. Polygon holds many gaming developers, and based on what we have seen, Web3 companies are betting high on gaming projects.

• Value to Holders: one thing is clear. Investors in NFT care mainly about one thing: making profits. Therefore, projects that prioritize giving back valuable returns to their community members are the ones that will stand out and create loyalty among the community members.

• Decentralized Social Media: after the release of the Twitter files, which revealed ‘Secret Blacklists’ And ‘Shadow Banning’ in social media, we have seen a darker side of social media, which is a result of centralization. This will open the doors for decentralized web3 social media projects (and NFTs) that promote transparency and are run by 'the people rather than a central authority manipulating the content.

• In-Real-Life Utility: speculation and social media 'hype' played a significant role in motivating retail investors towards investing in NFTs. Many projects attracted investors by promising them big future applications and benefits. However, people have learned from their mistakes and become more careful about where they place their money. The projects that promise AND deliver In-real life utility, which is tangible, genuine, and valuable, will outstand from the rest.

That's all for this year's report! We'll be back next week with another new article expanding on the Trends to watch in 2023. Make sure you subscribe to our new's letter to stay up to date with the latest news and insights!

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