The NFT market has experienced a bounce-back in January 2023 after a disappointing end to the year 2022. The NFT market was fueled by the ease of macroeconomic tensions and the launch of new collections by some of the industry’s largest players, including Yuga Labs, Doodles, and Moonbirds.

NFT Sales Volume Soars in January 2023

The NFT market is once again showing signs of growth, with trading volumes increasing for two consecutive months. According to the Dapp Industry Report, January 2023 saw the highest trading volumes since June of the previous year, reaching $946 million, a 38.5% increase from December.

Rise in Transactions and Trading Volume

Source: Dappradar

According to Dappradar, NFT market has reached its highest trading volume since June of 2022. The number of NFT sales also skyrocketed, rising by 42% from the previous month with a total of 9.2 million sold. This displays a thriving and expanding NFT market, indicating that the industry has rebounded in a major way.

This is a stark contrast to the downward trend seen in October, but November and December saw a stabilization and recovery in trading volumes.

The trading volume in dollars also saw a significant increase since the $1 billion peak in June.

The market is showing favorable conditions for entrepreneurs to develop an NFT marketplace or a NFT venture. The market is set to grow at this rate for the year 2023 and even the market experts and analytsts agree to this change of wind for web3 scene.

Ethereum remains the leading blockchain in the NFT market, accounting for over 78% of all trades, but the biggest influx of traders was seen on the Polygon blockchain in January, growing 124% to reach $46 million. Solana and Ronin follow closely behind with $4.2 billion and $3.7 billion in all-time sales, respectively.

Source: Dappradar

This growth shows no signs of slowing down as the NFT sales volume on the blockchain increased 43.5% in the past week.

Decreasing inflation and slowing interest-rate increases are benefiting risk assets across the board, and NFT market is no exception. Juan Leon, a research analyst at Bitwise Asset Management, says that “you’re starting to see some momentum from the macro perspective and a bounce back from things that were so oversold”.

The Impact of Yuga Labs and Other Industry Players

Yuga Labs’ latest collection, the Sewer Pass, which serves as a key for the company’s latest blockchain game, made up 34.3% of all NFT transactions in January. Doodle’s acquisition of an Emmy-nominated animation studio and Moonbirds’ contract with a Hollywood talent management company also drove confidence in the market. According to NFT Price Floor, Doodle’s average price increased by 1.82% in January, and Moonbirds’ by 3.43% in January.

This year “could mark the red carpet entrance of NFTs to Hollywood”.

Marketplaces for Traders vs Collectors

Source: Dappradar

Marketplaces aimed at traders are gaining ground on those geared towards collectors. For the past three months, Blur has maintained a 20% share in the NFT market. This platform, known for its low marketplace and creator fees, has consistently been a popular choice among NFT buyers and sellers.

The expected launch of a platform token that rewards traders for listing and trading on its service has also driven up usage. However, this model may not be sustainable as the continued usage of platforms that reward their users with tokens has failed to result in long-term economic activity.

Top-Performing Collections

The best-performing collections so far this year have been profile-picture collections, likely because of their liquidity. The report revealed that during January’s market slowdown, blue-chip collections performed the strongest, as they were responsible for all the 10 highest NFT sales during that month. The Bitwise Blue-Chip NFT collections index showed a 28.6% price increase from December, but it is still down nearly 65% from January 2021.

As per the recent report by DappRadar, OpenSea continued to reign as the largest NFT marketplace, generating a trading volume of $495 million in January. The platform earned a substantial revenue of $12.3 million from platform and creator fees. The platform’s longevity and user familiarity have contributed to its success, making it a trusted and preferred choice among NFT enthusiasts. The report highlights OpenSea’s strong hold in the NFT market, which is a testament to its ability to provide a seamless experience to both buyers and sellers.

Diversifying Alliances to Different Blockchains

Some NFT collections, like DeGods and y00ts, are diversifying their alliances to different blockchains, which could attract other holders seeking new opportunities or value elsewhere. This diversification could also help drive new use cases for NFTs as creators and projects look to capitalize on the bullish market. Ryan Wyatt, CEO of Polygon Studios, told that they decided to focus on the untapped potential of web3 by onboarding large enterprise brands, DeFi platforms, and gaming companies.

The consecutive growth of the NFT market over the past few months could also indicate a broader upward trend in the crypto market. It is an exciting time for the NFT world and we will be keeping a close eye on the developments and growth in the coming months.

Coinbase NFT Pauses Adding New Collections

Despite the encouraging industry numbers, one marketplace, Coinbase NFT, has decided to take a pause in adding new NFT collections. Coinbase NFT, which had an underwhelming start, announced that it would be pausing new creator drops on its marketplace to “focus on other features and tools that creators have asked for”. However, the company claimed in a Twitter post: “To be clear: We are not leaving the NFT space.”

Rise in Blockchain Gaming Continues

Source: Dappradar

According to the latest report, there were some noteworthy developments in the world of blockchain and dApps in January 2023. Despite a drop in overall daily Unique Active Wallets (dUAW), which decreased by 9.55% compared to the previous month, the blockchain gaming sector showed impressive growth. With a daily average of 839,436 unique active wallets, the sector increased its dominance from 45.2% to 48%. This aligns with the findings of a recent 2022 report by DappRadar, which showed the blockchain gaming industry gathering momentum.

DeFi Show Signs of Recovery in January 2023

Source: Dappradar

DeFi sector is also regaining strength as the Total Value Locked (TVL) has risen 26.8% from December to January. DappRadar also reports that the DeFi market showed signs of recovery in January 2023 as the TVL increased by 26.82%, reaching $74.6 billion from the previous month. Although the NFT market has seen significant growth as a result of the cryptocurrency market surge, other on-chain metrics also suggest a bullish trend.

Solana Sees a Resurgence

Additionally, the report also showed a resurgence in the use of Solana. After the collapse of FTX, users seem to be returning to the Layer 1 blockchain. In January, it reached 53,683 dUAW, a 70% increase from the previous month. This growth was driven by the increased usage of DeFi dApps such as Raydium, MeanFi, Orca, and Saber.

Lido Finance Emerges as the Largest DeFi Protocol

The DeFi landscape has been undergoing a major shift, with new protocols rising to the forefront of the industry. According to DappRadar, Lido Finance has recently surpassed Maker DAO as the largest DeFi protocol, largely due to the increased popularity of Liquid Staking Derivatives (LSD).

The transition of Ethereum to a Proof-of-Stake (PoS) system has been a key factor in the growing interest in LSDs, and Lido has taken advantage of this trend. As a result, its fee revenue has grown in direct correlation with Ethereum’s PoS earnings. This highlights the importance of staying attuned to changes in the DeFi market and being able to adapt quickly to new trends and opportunities.

The crypto markets have been recovering from a bear market, and the NFT and DeFi sectors have shown signs of improvement in January 2023. The NFT sales volume reached its highest point since June 2022, and the DeFi TVL increased significantly from December to January. Lido Finance has emerged as the largest DeFi protocol, capitalizing on the growing popularity of LSD protocols and Ethereum’s shift to PoS.

Is it the Right Time to Launch an NFT Marketplace?

With the NFT market showing signs of recovery and growth, many are wondering if it’s the right time to launch a new NFT marketplace. However, just because the market is growing doesn’t necessarily mean it’s the right time to launch an NFT marketplace. Before making the decision, it’s important to consider the following factors:

Competition

The NFT market is becoming increasingly crowded, with new marketplaces launching regularly. To stand out, you’ll need to offer something unique, whether it be a specialized niche, innovative technology, or user-friendly platform.

Costs

Launching an NFT marketplace can be expensive, as you’ll need to invest in technology, marketing, and other resources. Before taking the leap, make sure you have a solid business plan in place and have considered the costs involved.

Market demand

While the NFT market is growing, it’s important to consider the specific demand for your marketplace. Are there enough buyers and sellers in your target market to make your marketplace viable?

Legal and regulatory environment

The NFT market is still evolving, and regulations are changing rapidly. Before launching an NFT marketplace, it’s important to make sure you’re aware of the legal and regulatory requirements and have a plan in place for compliance.

Overall, the growth in the NFT market is a positive sign, but it’s important to carefully consider the above factors before launching a new marketplace. If you have a solid business plan, are prepared for the costs involved, and are confident in the demand for your marketplace, now could be the right time to launch. However, if you’re unsure or have concerns, it may be wise to wait until the market becomes more established and regulations become clearer.

How to develop the NFT marketplace?

Developing an NFT marketplace can be a lucrative venture in the current market. To get started, here are some steps to consider:

Conduct Market Research

Get a clear understanding of the NFT market and its current trends. Look at existing NFT marketplaces and see what sets them apart, what their strengths and weaknesses are, and what opportunities there are for you to provide something unique.

Define Your Target Audience

Identify your ideal customer and what they are looking for in an NFT marketplace. Consider the artists, collectors, and investors you want to target and understand their pain points and preferences.

Choose Your Blockchain

Decide which blockchain you will build your NFT marketplace on. Ethereum, for example, has been the leading blockchain for NFTs, with over $36 billion in all-time sales. However, you may also consider newer platforms such as Polygon, which had the biggest influx of traders in January 2023.

Design a User-Friendly Experience

Ensure that your NFT marketplace is easy to use and accessible to a wide range of users, including those who are new to the NFT world. Offer a seamless buying and selling experience with an intuitive interface and user-friendly navigation.

Secure Your Platform

NFT marketplaces are vulnerable to hacking, as they store valuable digital assets. Ensure that your platform is secure and implement the necessary measures to prevent theft and fraud.

Build Strong Partnerships

Build relationships with artists, collectors, and investors to increase the visibility of your NFT marketplace. Offer incentives for them to use your platform, such as discounts, exclusive events, and more.

Launch and Promote Your Marketplace

Once your NFT marketplace is ready, it’s time to launch and promote it. Use various NFT marketing strategies such as social media, email marketing, and paid advertising to reach your target audience.

By following these steps, you can create a platform that is secure, user-friendly, and appealing to both artists and collectors.

Conclusion

The rebound of the NFT market in January 2023 has been fueled by the easing of macroeconomic tensions, the launch of new collections by industry players, and an increase in transactions and trading volume. The future of the NFT market remains uncertain, but with continued interest from both industry players and consumers, it has the potential for continued growth and success.

Rise of the NFT Market in 2023: An In-Depth Analysis on How the NFT Market Rebounded was originally published in CryptoStars on Medium, where people are continuing the conversation by highlighting and responding to this story.