September NFT Market: Bearish Sentiment Prevails - Footprint Analytics

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In September, Rolling Stone, a prominent mainstream media outlet, garnered significant attention with a captivating article titled “Your NFTs Are Actually — Finally — Totally Worthless”. This article claimed that “95 percent of the once-hyped crypto assets have hit rock-bottom valuation”, rendering them “largely worthless”. While this narrative struck a nerve, the reality is more nuanced and offers reasons for optimism.

Although the NFT market experienced a significant month-on-month decline in September, with a trading volume of $370.9 million, it’s important to recognize that this volume is still worth something. In this report, we delve into the dynamics of blockchain networks, NFT marketplaces, and funding activities within the NFT space, revealing promising aspects that inspire hope.

Data for this report was obtained from Footprint Analytics’ NFT research page. An easy-to-use dashboard containing the most vital stats and metrics to understand the NFT industry, updated in real-time, you can find all the latest about trades, projects, fundings, and more by clicking here.

Key Points

Crypto Macro Overview

In September, Bitcoin displayed a relatively narrow price range, fluctuating between a monthly low of $25,158 and a high of $27,210.

NFT Market Overview

In September, the NFT market bucked the trend of Bitcoin and experienced a significant downturn, characterized by a significant drop in trading volume.
The Blue Chip Index witnessed a downtrend in September, with a decline of 7.5%.

Chains & Marketplaces for NFTs

Ethereum’s trading volume amounted to $364.0 million, 30.3% down from August.
The dominance of Blur in terms of trading volume has been gradually diminishing. LooksRare saw an upward trend with a market share of 19.3% in September.

NFT Investment & Funding

In September, the NFT market continued to exhibit a sluggish pace, with a total of three funding rounds amounting to $27.14 million.
Prominent crypto ventures such as a16z have shown signs of engaging in bottom-fishing strategies, but haven’t yet invested in the NFT market.

What’s New?

NFT brand Pudgy Penguins debuts toy collection in 2,000 Walmart stores.
Google to allow NFT game ads starting September 15, excluding gambling content.
Animoca Brands raises US$20M for its Mocaverse project.
Web3 arts startup TRLab raises $5 million from Hivemind Capital, OKX Ventures.
Casio Partners With Polygon To Launch G-SHOCK NFT Project.

Crypto Macro Overview

In September, Bitcoin displayed a relatively narrow price range, fluctuating between a monthly low of $25,158 and a high of $27,210. The month began with an initial value of $25,940 and demonstrated a modest increase of 3.7% throughout the period, closing the month at $26,899.

*Source: *BTC Price & ETH Price

In comparison to the previous month, September witnessed an uptick in both the value and on-chain activity. This increase in on-chain activity could potentially be attributed to new investors positioning themselves ahead of potential regulatory approval for a spot Bitcoin ETF, a development that had made progress in late August.

Additionally, Bitcoin received support from the news that the trustee overseeing the defunct cryptocurrency exchange Mt Gox would postpone creditor repayments until October 2024. The Mt Gox estate currently holds approximately 138,000 Bitcoin, valued at $3.7 billion, and this decision is expected to keep that supply off the market for the foreseeable future.

NFT Market Overview

In September, the NFT market bucked the trend of Bitcoin and experienced a significant downturn, characterized by a significant drop in trading volume. The total trading volume for the month was $370.9 million, a significant decrease of 30.6% compared to August. The number of transactions also declined, reaching 1,038,886, a decrease of 7.7%. In addition, the number of unique users in September was 244,186, a decrease of approximately 22.5%.

*Source: *NFT Market Overview

The recent market downturn has had a noticeable impact on the market cap, which continued to fluctuate and trend lower throughout the month.

*Source: *NFT Market Cap & Volume

In September, the NFT market experienced a buyer/seller ratio of 103.0%, reflecting a 29.2% decrease from August. Throughout the month, there were 14,832 buyers and 143,617 sellers. Notably, the number of buyers declined by 30.6%, while sellers saw a decrease of 11.0% compared to the previous month. These figures indicate a slowdown in NFT market activity during September, with fewer buyers and sellers participating, suggesting that the bearish sentiment still prevails.

*Source: *Daily Buyers & Sellers

The trend observed in daily unique users closely mirrored that of daily buyers and sellers during September. Notably, from September 20 to 22, there was a modest uptick in user engagement attributed to the airdrop activity associated with Pandra: PixelProwler NFT on 4 blockchains, with Polygon experiencing particularly heightened participation.

*Source: *Daily Unique Users

The Blue Chip Index witnessed a downtrend in September, with a decline of 7.5%.

*Source: *BlueChip Index

Despite experiencing significant price declines in popular collections, some NFT projects are exploring opportunities beyond digital marketplaces to engage with a broader audience in the real world. One approach involves selling physical products through established platforms.

An example of this expansion is seen in Pudgy Penguins, which recently introduced its Pudgy Toys collection in 2,000 Walmart stores across the United States. Each toy is accompanied by a unique birth certificate that allows owners to claim distinct traits for their digital “Forever Pudgy” character within Pudgy World. This online virtual world operates on the zkSync Era blockchain and allows users to scan a QR code to activate their digital character. Pudgy Penguins has effectively utilized social media and experiential marketing strategies to attract and retain an audience, distinguishing itself from other NFT brands that have struggled to maintain momentum.

*Source: *walmart.com

Chains & Marketplaces for NFTs

In September, Ethereum’s trading volume amounted to $364.0 million, representing a substantial 98.1% of the NFT market’s total trading volume. However, there was a 30.3% decrease in total Ethereum volume compared to August, reflecting the downward trend seen in the overall NFT market.

Source:* Monthly Volume by Chain*

Ethereum attracted a total of 135.6K unique users, a decrease of 8.1% compared to August. Polygon also witnessed a decrease in unique users, with a total of 93.7K, down 30.5%. On the BNB Chain, there were 31.7K unique users, a significant decrease of 42.2%. User engagement has continued to decline over the last few months.

*Source: *Monthly Unique Users by Chain

Speaking of NFT marketplaces, the dominance of Blur in terms of trading volume has been gradually diminishing. Its market share fell from 48.9% to 47.0% in September, following a downward trend that began in June when its share was 64.4%. Conversely, LooksRare saw an upward trend over the same period. Its market share rose from 8.9% in June to 19.3% in September. Meanwhile, OpenSea maintained a stable market share of 22.4% in September, slightly lower than its August share of 23.2%. The NFT marketplace landscape is shifting, with Blur’s dominance waning and LooksRare gaining traction.

*Source: *Monthly Volume by Marketplace — Distribution

In September, the NFT market experienced a decline in overall user activity, resulting in a decrease in the number of users engaging with most marketplaces. Despite this trend, OpenSea remained the dominant player, attracting a substantial user base of 189.6K unique users. However, this figure represented a significant decline of 29.7% compared to August. On the other hand, Element saw a positive trend in user engagement. In September it recorded 41.3K unique users, an increase of 13.7% compared to the previous month.

*Source: *Monthly Unique Users by Marketplace

The NFT marketplaces continued to engage in a lively debate surrounding NFT royalties throughout September. Rarible announced its decision to stop aggregating orders from OpenSea, LooksRare, and X2Y2 after September 30th. This move was made in support of maintaining and promoting the importance of royalties in the NFT ecosystem.

Source: Rarible X (Twitter)

The discussion on royalties gained momentum when X2Y2 introduced a 0% royalty fee for creators in February 2022. Subsequently, platforms like Sudoswap, Magic Eden, and LooksRare also adopted similar approaches later that year. OpenSea, initially a strong advocate for creator royalties, had set them at up to 10%. However, in February of this year, tensions with the competing Blur led OpenSea to reduce the royalty fees. OpenSea’s recent decision to make royalties optional resulted in the disabling of the OpenSea Operator Filter, a tool that enforced creator royalties.

NFT Investment & Funding

In September, much like the preceding month, the NFT market continued to exhibit a sluggish pace, with a total of three funding rounds amounting to $27.14 million.

Animoca Brands has recently disclosed the acquisition of binding commitments for a funding round amounting to a significant sum of US$20 million. This funding injection aims to expedite the development of their esteemed project, Mocaverse. The funding round was led by CMCC Global, accompanied by notable investors such as Kingsway Capital, Liberty City Ventures, GameFi Ventures, and others.

*Source: *Animoca Brands Website

Mocaverse is the membership NFT collection for Animoca Brands’ extraordinary family of companies, projects, investments, shareholders, and partners. Its primary objective is to construct Web3-native tools that empower products in gaming, culture, and entertainment. Through Mocaverse, users can forge their own digital identity, accumulate reputation, earn and utilize loyalty points, and leverage their digital presence to access the expansive Mocaverse ecosystem. This ecosystem is fueled by Animoca Brands’ extensive portfolio of over 450 companies and a partner network boasting more than 700 million potential users. Mocaverse will soon launch Moca ID, a collection of non-transferrable NFTs specifically designed to enable users to shape their on-chain identities and actively participate within the Mocaverse ecosystem.

TRLab, a fine art NFT platform, secured $5 million in seed round funding. The round was led by Hivemind Capital Partners and OKX Ventures, with the participation of HashKey Capital.

TRLab collaborates with artists, art institutions, and estates to conceive, create, and launch art experiences that prioritize digital-first approaches for both established and emerging collectors. Notably, TRLab’s platform has already facilitated notable projects in partnership with renowned entities such as Vogue, the Calder Foundation, Cai Guo-Qiang (a contemporary artist), and Rhizome, the digital art-focused affiliate of New York’s esteemed New Museum.

*Source: *Your Daytime Fireworks by Cai Guo-Qiang- TRLab

Despite the continued depression of the crypto market in September, prominent crypto ventures such as a16z have shown signs of engaging in bottom-fishing strategies. Notably, a16z maintained a relatively low investment activity from June to August 2023, with only one monthly investment. However, their recent resurgence is evident with four investments made in September. It is worth mentioning that none of these investments were directed at the NFT market.

Ending Words

The mainstream media often seek out extreme narratives, focusing on absolute highs and lows to create attention-grabbing headlines. In the midst of this media frenzy, however, it’s important to remember that the dedicated creators and builders of the NFT work tirelessly behind the scenes, undeterred by market fluctuations.

People are saying “Now is the time to buy” when Rolling Stone publishes an article like this.

Data includes:

Blockchains: Ethereum, Polygon, BNB Chain, Cronos, Optimism
Marketplaces: OpenSea, LooksRare, Blur, X2Y2, Cryptopunks, Rarible, SuperRare, Foundation, Decentraland, Aavegotchi, Element, Era7, the Sandbox, Minted

What is Footprint Analytics?

Footprint Analytics is a blockchain data solutions provider. It leverages cutting-edge AI technology to help analysts, builders, and investors turn blockchain data and combine Web2 data into insights with accessible visualization tools and a powerful multi-chain API across 20+ chains for NFTs, GameFi, and DeFi.

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