NFT spending continues to soar in 2022

While the popularity of non-fungible tokens (NFTs) clearly skyrocketed last year, new research from Chainalysis, the blockchain data platform, shows that, while activity is stabilizing, spending is on track to reach all-time highs through 2022. According to the report, collectors have sent over US$37 billion to NFT marketplaces as of May 1, putting them on track to surpass the total of US$40 billion sent in 2021.

“NFTs have been one of the most dynamic and prominent parts of Web3 over the last two years,” said Ethan McMahon, Economist at Chainalysis. “To a large extent, the current excitement around NFTs stems from their utilisation in buying and trading digital art. But the potential of this technology is far greater as it can be used to not only give the holder ownership over the digital data, or media associated with the token, but also real-world assets.”

The number of active NFT buyers and sellers has increased in tandem with the popularity of NFTs. In the first quarter of 2022, 950,000 unique addresses purchased or sold an NFT, up from 627,000 in the fourth quarter of 2021. Since Q2 2020, the number of active NFT buyers and sellers has increased in each quarter. As of May 1, 491,000 addresses had transacted with NFTs in Q2 2022, putting the NFT market on track to maintain its quarterly growth trend in terms of participants.

The report then examined the monthly share of internet traffic to NFT marketplaces by geography, revealing that, while some regions are more active than others, the fact that no region has accounted for more than 40% of total web traffic since the beginning of 2021 suggests that, like cryptocurrency in general, NFTs have captured a global audience. Web traffic to NFT marketplaces in the Middle East peaked in mid-2021 and has since stabilized, accounting for around 5% of total global traffic.

Chainalysis’ research shed light on who is investing in and collecting NFTs by analyzing trends in transaction size. “While there have been some significant monthly fluctuations, we see that NFT collectors — with transaction sizes ranging from $10,000 to $100,000 — account for the majority of activity.” “However, institutional investors — those with transaction values greater than $100,000 — are nipping at their heels, and in some weeks when extremely large purchases have been made, they make up the majority of activity,” McMahon said.