Are NFTs Making a Comeback or Just Riding the Hype?

NFT sales have taken a turn for the better after a dull period. What’s behind this momentum and is it a sign of a permanent revival?

NFTs are finally making a comeback

Non-fungible tokens are starting to show signs of life again after a rather dull performance over the last few weeks.

According to data from CryptoSlam, sales between September 30 and October 6 exceeded $84.9 million, marking the highest sales volume since the week ending August 25, when over $93 million was recorded.

What’s even more interesting is that the NFT market gained momentum throughout September. During the week of September 16-22, NFT sales reached $69 million and rose modestly to $75 million the following week of September 23-29.

As of October 7, more than $5.5 million in sales were made this week, indicating that the market may continue this upward trend.

In addition to the increase in sales volume, there was also an increase in activities, with over 2 million transactions recorded in the last seven days as of October 7, an increase of 29.73% compared to the previous period.

But it’s not all sunshine. The average sale price of NFTs is down 32.91% and currently sits around $43 per sale; This suggests that even though more people are engaging with NFTs, high-priced collectibles may still be left behind.

While the numbers show positive momentum, what is the reason for this recovery? Let’s take a deeper dive into which blockchains are leading the NFT race, why NFTs are making a comeback, and what we can expect in the coming days.

Which blockchains are ahead in the race?

As of October 9, Ethereum (ETH) continues to lead as the dominant blockchain in the NFT space, but the landscape is changing and other platforms are quietly gaining ground.

Ethereum (ETH)

Ethereum continues to lead in terms of NFT sales, generating over $26.5 million in revenue last week. Ethereum’s sales account for about 31% of the entire NFT market, but it is also plagued by a relatively high percentage of wash trades (about 11.69%).

Wash trading involves artificially inflating volume by buying and selling within the same wallet to create the illusion of higher demand.

Despite this, Ethereum’s large user base and dominance in the NFT ecosystem cannot be ignored, as more than 136,000 buyers were recorded during this period.

However, the transaction volume (over 654,000) shows an increasing reliance on smaller transactions, with the average selling price falling sharply.

Myth (LEGEND)

A relatively newer player, Mythos (MYTH), is perhaps the most surprising competitor. Sales jumped over 6,200% last week alone, reaching $15.3 million, placing it in second place.

This boom is driven by a gaming-focused focus leveraging a relatively untapped and highly passionate user base. In-game assets such as NFTs have become a concept that players are increasingly embracing, and Mythos is positioning itself as a leader in this space.

What’s even more interesting is that this increase isn’t linked very much to wash transactions, as only 0.28% of its transactions are wash transactions, indicating that the platform is experiencing real user-driven growth.

Mythos processed more than 632,000 transactions this week alone; This is almost five times that of Ethereum, signaling that it may be a blockchain to keep a close eye on based on this rapid adoption.

But gaming NFTs are heavily dependent on the success of the underlying games. Therefore, if these games fail to attract or retain users, there could be a sharp decline in the NFT market on Mythos.

Bitcoin (BTC)

Bitcoin (BTC) entering the NFT race was not something many expected a few years ago. Traditionally viewed as a store of value, Bitcoin’s blockchain was not designed with NFTs in mind.

However, the introduction of Ordinals has breathed new life into Bitcoin’s potential in this field. While $14.1 million in weekly sales volume may seem modest compared to Ethereum, it’s notable that Bitcoin’s NFT market is growing organically, with wash trading at just 5.15%.

Interestingly, despite having fewer transactions and users compared to Ethereum, Bitcoin has a higher average selling price, indicating that the NFT market may be geared towards higher-end, premium assets.

Solana (LEFT)

Solana (SOL) remains a serious contender and ranks fourth with over $10.8 million in sales this week.

However, Solana’s wash trading percentage (a whopping 22.7 percent) is one of the highest among the top blockchains; This suggests that although Solana is seeing growth, much of its activity may be artificially inflated.

But with nearly 223,000 weekly unique buyers and more than 421,000 weekly transactions, it’s clear that Solana remains a major player, especially among collectors who prefer faster and cheaper transaction fees than Ethereum offers.

Polygon (POL)

Known for its efficiency and low transaction costs, Polygon (POL) had over $10.7 million in sales last week, with washes accounting for just 0.25% of its transactions; This is much lower than Ethereum or Solana.

Polygon also recorded an impressive 84,532 sellers; This shows that blockchain is attracting a healthy level of market activity.

Why are NFTs on the rise again?

The recent rise in NFT sales can be traced to a few key developments; the most notable of which is a high-profile but questionable CryptoPunk sale and the introduction of innovative NFT features by Telegram.

A flash loan-backed transaction involving CryptoPunk #1563 recently made headlines when it was revealed that it had sold on the Ethereum blockchain for an eye-popping $56.3 million.

On the surface, this looked like a massive sell-off in an area struggling with low sales volumes and falling prices.

However, a closer look revealed that the sale was not legitimate at all. CryptoPunk’s buyer used a flash loan, an unsecured loan repaid in the same transaction that creates the illusion of a large purchase.

3/ Progress:

Contract A holds Punk #1563, Contract B holds nothing.

Contract A lists 24,000 ETH.

Contract B borrows 24,000 ETH from Balancer.

Contract B purchases #1563. Contract B now has #1563 and contract A has 24,000 ETH.

Contract A returns ETH to the Balancer. pic.twitter.com/Clw1JGWASn

— Quit (@0xQuit) October 3, 2024

In reality, Punk, purchased for just $69,000 in September, was transferred between wallets without any actual money changing hands. Despite this, the sale attracted attention and controversy, renewing interest in the NFT space.

These carefully orchestrated events are attracting the attention of investors, especially those who have withdrawn from the market amid a broader decline in NFT activity.

The psychological impact of these “sell-offs” can reignite fear of missing out and draw speculators back into the space, anticipating that increased interest could lead to real opportunities.

Simultaneously, Telegram’s move into the NFT space has offered a more accessible way for users to engage with digital collectibles.

On October 5, Telegram launched its new “Gifts” feature, which consists of animated images that can be sent to people on the platform. But what’s most exciting is that these Gifts will be converted into NFTs later this year, and Telegram will allow users to mint these limited edition assets on the TON blockchain.

The feature builds on Telegram’s previous introduction of Stars, an in-app currency that users can spend on digital services on the platform. By connecting NFTs to social interactions, Telegram makes NFTs more accessible to ordinary users.

Telegram’s NFT integration is a significant development due to its large user base and seamless experience. Users will soon be able to convert, trade, and even auction these digital gifts into NFTs while remaining within the Telegram ecosystem.

While the overall market saw its lowest sales volume in September since January 2021, these recent events have breathed new life into the sector. It remains to be seen whether this resurgence will continue, but for now, NFTs are back in the spotlight.

What to expect next?

Looking ahead, the NFT space faces some uncertainty, particularly due to the U.S. Securities and Exchange Commission’s recent Wells notice issued to OpenSea, the largest NFT marketplace.

On August 28, the SEC signaled its intention to take enforcement action against OpenSea, claiming that some NFTs on the platform may qualify as securities. This could have significant impacts on the entire NFT ecosystem.

The Wells notice is a formal warning that the SEC may take legal action, and although OpenSea has the opportunity to respond, the looming threat creates an atmosphere of uncertainty.

The SEC’s classification of certain NFTs as securities could trigger a wave of regulatory scrutiny not only for OpenSea but for other platforms and NFT projects as well.

The potential for tighter regulation could cause some investors to hesitate and slow market growth, especially for projects that lack clear regulatory frameworks.

At the same time, the current surge in NFT sales appears to be largely driven by hype. It remains to be seen whether this buzz will translate into long-term growth or be a short-lived trend.