Author: Ezra Reguerra, CoinTelegraph; Translated by: Deng Tong, Golden Finance
Despite some significant setbacks for the asset class, non-fungible tokens (NFTs) remain an indispensable part of the Web3 space in 2024. Industry commentators and professionals insist that the utility of NFTs remains intact, fostering optimism for a recovery.
While the media occasionally declares NFTs dead, holders continue to trade, with data tracker CryptoSlam showing that NFT sales this year are approximately $8.5 billion.
Sales volumes may be lower than in previous years, but the number of buyers increased from 4.6 million in 2023 to 7.5 million in 2024, a growth of 62%. This also surpasses the 5.4 million unique buyers recorded in 2022, a year widely regarded as the peak for NFTs. Therefore, while transaction volumes may be declining, demand for this asset class continues to grow.
Despite the field's ongoing presence, it is undeniable that NFT holders have been hit hard this year, with seven consecutive months of declines and major projects exiting the space, culminating in the SEC issuing Wells notices to NFT projects.
In 2024, NFT projects faced severe setbacks.
In January of this year, social media platform X discontinued support for NFTs. The previous year, the platform allowed paid users to link NFTs to their profile pictures. One community member called this the 'last straw' for NFTs, while another described it as 'another blemish' on the industry.
Some question the decision to remove the feature, arguing that it provided real utility for users and raised issues of bot accounts and scammers. One community member stated that NFT profile pictures allowed users to confirm that the individuals they were interacting with were real.
In the same month, video game retailer GameStop announced it would close its NFT marketplace, citing unclear U.S. regulations.
In July, U.S. betting company DraftKings also took similar actions, shutting down its NFT business, including its Reignmakers series and marketplace, citing 'legal developments'.
Additionally, the layer two blockchain Immutable and cryptocurrency exchange Kraken closed their NFT marketplaces in August and November, respectively.
In December, Nike's NFT project RTFKT announced it would cease operations in January 2025.
SEC issues Wells notice to NFT entity.
The SEC intensified its focus on NFTs in 2024. On August 28, OpenSea CEO Devin Finzer stated in an X post that the securities regulator had issued Wells notices to NFT trading platforms.
A Wells notice is a formal notification issued by the SEC indicating that it is considering taking enforcement action against an entity. The notice indicates that the agency has completed its investigation and found evidence that may violate securities laws.
Finzer stated that the SEC's charges against NFTs on OpenSea could be viewed as unregistered securities. The executive mentioned that the market is prepared to combat any enforcement actions from the agency and added that the SEC's focus on NFTs will 'stifle innovation' on a larger scale, putting artists and creatives at risk.
On December 16, the NFT platform CyberKongz received a Wells notice from the SEC. The CyberKongz team stated that the issue stemmed from its sale of Genesis Kongz NFTs in 2021.
The project stated that the SEC approached them with 'concerning language', stating that tokens cannot be used for blockchain gaming unless registered as securities. CyberKongz indicated that the SEC's stance could have far-reaching implications for blockchain gaming and pledged to contest these allegations.
NFTs face a seven-month slump in 2024.
NFT sales reflect broader challenges in 2024. The highest monthly sales in March reached $1.6 billion, thanks to NFTs on Ethereum, Bitcoin, and Solana—the three most popular blockchains for digital collectibles.
However, the market has steadily declined, with NFTs hitting an all-time low in September, with monthly sales dropping below $300 million for the first time since 2021. The total volume of NFT transactions also fell from 7.3 million in August to 4.9 million in September.
After the market hit a low point, NFTs reversed course in October, growing by 18% with sales of approximately $356 million. In October, Solana-based NFTs also achieved a historic sales milestone of $6 billion.
November's performance was even stronger, with monthly NFT sales reaching $562 million, the highest level in six months. Later in the year, the recovery of NFT assets was again driven by Ethereum, Bitcoin, and Solana collectibles.
NFT Predictions for 2025
While some may have given up on NFTs, professionals working in the field have various theories about a potential comeback.
Jana Bertram, strategic director of the RARI Foundation, stated in an episode of the Hashing It Out podcast that NFTs could return in different forms, acknowledging the decline in transaction volumes but asserting that the technology still holds value.
Bertram believes that NFTs can extend beyond digital art and collectibles, branching into practical applications such as authentication, ownership records, and healthcare documentation.
When asked about the outlook for Bitcoin NFTs in 2025, OKX's Global Chief Business Officer Lennix Lai stated that these assets are entering a new growth phase. He shared that their trading data reflects a recovery, with Ordinals' transaction volume growing by 55% from October to November. He said:
"We are seeing encouraging signs of adoption—from the first jewelry brand supported by Bitcoin to launch the Ordinals series, to well-known artists choosing to inscribe their works on the world's first blockchain."
Lai also shared that they are launching an Ordinals launchpad to enable creators to publish, inscribe, and trade collectibles on Bitcoin. "With these foundations and broader market tailwinds, we believe the Bitcoin NFT movement is still in its early stages and has tremendous growth potential in the future," Lai said.
Meanwhile, Animoca Brands' Executive Chairman Yat Siu pointed out that the NFT market will become larger than in 2021 and 2022. He believes that as the crypto market grows, every component within the Web3 space will grow accordingly:
"Standard Chartered predicts that the crypto market could reach $10 trillion by 2026. If this is true, then everything will be fine. This means that, based on the current market trading volume for NFTs, I believe its monthly transaction volume will exceed billions of dollars as the entire market grows."
