NFT Market Shows Resilience Despite Setbacks in 2024
NFTs remained a crucial element within the Web3 ecosystem throughout 2024, despite significant headwinds for the asset class. Industry experts and professionals maintain that the utility of NFTs persists, generating optimism for a potential turnaround. While media outlets have occasionally declared NFTs “dead,” holders continue to trade, and data tracker CryptoSlam demonstrates roughly $8.5 billion in sales for the year. Though volumes have decreased relative to previous years, the number of buyers has increased notably – up 62% from 4.6 million in 2023 to 7.5 million in 2024, and 37% greater than the 5.4 million unique buyers recorded in 2022, a year widely considered the peak of NFT activity. This indicates a growing demand for the asset class, demonstrating resilience amidst considerable challenges.
Throughout 2024, NFT holders faced numerous setbacks, beginning with a seven-month downward trajectory and the closure of major projects. In January, social media platform X removed support for NFTs after a year of allowing paid subscribers to link them to their profile pictures. One community member termed this the “bottom” for NFTs, while another described it as “another black eye” for the industry. Concerns were raised regarding the potential for bots and scammers utilizing NFT profile pictures. The ability to verify the authenticity of interactions was a key argument in favor of NFT profile images.
The same month, video game retailer GameStop announced the shutdown of its NFT marketplace, blaming the absence of regulatory clarity in the US. American gambling company DraftKings followed suit in July, closing its NFT business, including its Reignmakers collections and marketplace. This decision was attributed to “legal developments.” In August and November, layer-2 blockchain Immutable and crypto exchange Kraken wound down their NFT marketplaces, respectively. Finally, in December, Nike-owned NFT project RTFKT announced its operations would sunset in January 2025.
The Securities and Exchange Commission (SEC) intensified its scrutiny of the NFT space during 2024. In August, OpenSea CEO Devin Finzer stated in a post on X that the regulator had sent a Wells notice to the NFT trading platform. A Wells notice signifies a formal notification from the SEC that it is considering initiating enforcement action against an entity, indicating the completion of an investigation and the discovery of potential breaches of securities laws. Finzer affirmed OpenSea’s readiness to challenge any enforcement actions from the agency, adding that the SEC’s targeting of NFTs would “stifle innovation” on a broader scale, posing risks to artists and creators.
CyberKongz, an NFT platform, also received a Wells notice from the SEC in December. The CyberKongz team explained that the issue stemmed from the sale of Genesis Kongz NFTs in 2021. The project noted that the SEC’s approach, characterized by “concerning rhetoric” regarding a token’s inability to be used with a blockchain game without registration as a security, could have far-reaching implications for blockchain gaming. CyberKongz pledged to contest the allegations.
NFT sales volumes mirrored the overall market turbulence of 2024. March witnessed the highest monthly sales at $1.6 billion, fueled by NFTs on Ethereum, Bitcoin, and Solana – the three most popular blockchains for digital collectibles. However, the market declined steadily, reaching a record low in September, when monthly sales fell below $300 million for the first time since 2021. Total NFT transactions also decreased from 7.3 million in August to 4.9 million in September. After this market low, NFTs reversed course in October, increasing by 18% to see sales of approximately $356 million. October also marked a milestone for Solana-based NFTs with $6 billion in total sales.
An even stronger performance followed in November as NFTs recorded monthly sales volumes of $562 million, their highest in six months. The resurgence of NFT assets later in the year was again driven by collections on Ethereum, Bitcoin, and Solana.
Professionals in the space are forecasting a potential return for NFTs, albeit in a different form. Jana Bertram, head of strategy at RARI Foundation, believes that NFTs will likely return with expanded functionality, recognizing that trading volumes have declined but maintaining the value of the underlying technology. Bertram envisions NFTs extending beyond digital art and collectibles, encompassing applications like identity verification, ownership records, and healthcare documentation.
Lennix Lai, the global chief commercial officer at OKX, shared that Bitcoin NFTs are entering a new growth phase. He highlighted a 55% increase in Ordinals volume from October to November, citing the launch of JRNE, the first Bitcoin-backed jewelry brand, and other established artists utilizing Ordinals to inscribe their creations. “With these foundations in place and broader market tailwinds, we believe the Bitcoin NFT movement is still in its early stages with significant growth potential ahead,” Lai stated.
Yat Siu, executive chairman of Animoca Brands, predicts that NFTs will become even bigger than they were in 2021 and 2022. He argues that as the crypto market grows, every component within the Web3 space will follow. “Standard Chartered predicted that by 2026, the crypto market could become $10 trillion. If that’s true, then everything will rise. That means that NFTs, at its current market trading volumes, I think it’s going to exceed billions of dollars of volume a month just because the whole market increases.” Siu also noted that as more people become involved with Bitcoin, they will discover NFTs and their utility, particularly within NFT ecosystems.
