The immersive progress of the NFT market in the past year has resulted in huge profits beyond every stock market. However, it seems that the market has calmed down since last month. As we dive into the market data, we could find out the reasons and lay down strategies.

NFT market is slowing down

According to NFTGo stats, the NFT market has grown slowly in February.

This has resulted in less volume entering the space. As of now, only $10.79 billion dollars have flown into the NFT space in February.

Today, institutions, investment funds are actively participating in this ever-growing ecosystem. This chart displays the NFT sellers and buyers ratio in the year 2021 and February separately. From the chart, we can conclude that buyers are double the sellers two months ago, while the number of buyers and sellers are almost the same now.  

Liquidity Performance

NFTGo calculates NFT liquidity across different categories within the NFT market. The land is the most liquid asset in all categories.

Collection Share

Analyzing the macro trends in the market is great for getting up to date with the general trends in the landscape. We first analyze the dominance of each project in value.

The chart above shows that more than half of the trading volume in the NFT market is dominated by only 10 projects, which is pretty astonishing. Most of these projects also hold half of the entire $17B NFT market cap.

Whale Analysis 

Every month, NFTGo looks into one whale address holding large amounts of blue-chips and analyzes how much they’ve contributed to the profits in their portfolio.

This address holds 7 BAYC NFTs in total, less than 4% of the total NFTs in their portfolio.

Although the NFT count is insignificant when compared with other NFT holdings, the story is totally different in profit metrics. We can analyze the value and estimated value distribution of this portfolio as well. By looking at the share of every collection in both value and the estimated value of the portfolio, we can see a clear distinction for the most successful NFT projects between buy value and current valuations.

This is showing the power law in NFT collections. As it goes up in the rankings in terms of market cap and trading volume, the collections become more and more profitable for early investors.

February Insights

In February, the Ukraine Crisis market has affected the market trends, and it also indicated the power of blue-chip NFTs. Nearly all the blue-chip NFT stayed strong during this period. It also shows that the success for all of these NFT investors has been early to rare blue-chips. By analyzing market data and thinking from the fundamental driving forces of the NFT market, we can clearly observe some of the most frequent patterns. 

Back in the early days of NFT summer, the hottest NFT projects were PFP projects and collectibles. Now, the market is transitioning to metaverse projects and utility NFTs. This shift can transform the NFT market valuations.

Profits don’t stay in one collection or one sector. Just like any other sector, it might be hard to look beyond the already existing blue-chip collections and think of new collections with potential. But this is the exact driving principle of profitable NFT investing.