NFT market shows signs of recovery as January trading volumes hit 7-month high

It appears the NFT market is slowly getting back on its feet. Trading volumes rose for two months straight, with January scoring the highest volumes since June last year, according to the Dapp Industry Report: January 2023.

The growth in January marked a stark difference from the trend of the past few months — October saw trading volumes dip to a low of $662 million — but in November, the market halted the downward trend to stay at $662 million, per the report.

Volumes then recovered in December, rising slightly to $683 million, and increasing 38.5% from that number to $946 million in January.

A number of blockchains allow traders to buy and sell NFTs, but Ethereum has held the leading position with over $36 billion in all-time sales, data from NFT aggregator CryptoSlam showed. In comparison, Ronin and Solana — the second and third largest blockchains by NFT sales volume in total — had about $4.2 billion and $3.7 billion, respectively.

January was strong for both Ethereum and Solana, which saw trading volumes of $659 million and $85 million, respectively.

Image Credits: DappRadar (opens in a new window)

February is showing signs of continued strength as well — at least so far. As of February 3, the Ethereum blockchain had $26.5 million sales across more than 25,500 unique buyers, according to CryptoSlam data.

While Ethereum accounts for the lion’s share of trading volumes, with more than 78% of all trades on the blockchain, Polygon had the biggest influx of traders in January, the report showed.

Polygon’s trading volume grew 124% to $46 million in January from $20 million in December. In the past week, NFT sales volume on the blockchain grew 43.5% to reach $2.8 million, indicating continued interest in the blockchain.

In late December, two large Solana NFT projects, DeGods and y00ts, said they would leave the blockchain in 2023, which stirred up conflicting sentiments across the community. DeGods said it would migrate to Ethereum, and y00ts plans to move to Polygon.

“At the beginning of the year, we noticed that much of the creator economy’s attention was focused on ETH and Solana,” Ryan Wyatt, CEO of Polygon Studios, previously told TechCrunch. “Therefore, we decided to go against the trend and focus on the untapped potential of web3 by onboarding large enterprise brands, DeFi platforms and gaming businesses. We did this successfully through ecosystem fund investments and white-glove partnership support.”

As big NFT collections like DeGods and y00ts diversify their alliances to blockchains, it could also draw in other holders who are seeking new opportunities or see value elsewhere.

The consecutive growth of the past couple months could also point to a broader upward trend across the crypto market. It could also potentially help drive creators and projects to form new use cases in the NFT world as they look to capitalize on the bullish marketplace.