Original author: Ezra Reguerra, CoinTelegraph
Compiled by: Lawrence, Mars Finance
Despite some major setbacks for this asset class, non-fungible tokens (NFTs) remain an indispensable part of the Web3 landscape in 2024. Industry commentators and professionals insist that the utility of NFTs is still intact, which brings optimism for a rebound.
While the media occasionally announces that NFTs are dead, holders continue to trade. Data tracker CryptoSlam shows that NFT sales this year are around $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 is also 37% higher than 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.
While the field has been around, it is undeniable that NFT holders have been hit hard this year, from seven consecutive months of decline and major projects exiting the field, to the SEC issuing Wells notices to NFT projects.
In 2024, NFT projects faced severe setbacks.
In January of this year, the social media platform X discontinued support for NFTs, after allowing paid users to link NFTs to their profile pictures the previous year. One community member called this the "last straw" for NFTs, while another referred to it as yet another "stain" on the industry.
Some questioned the decision to remove the feature, arguing it provided real utility for users and raised issues about bot accounts and scammers. One community member stated that NFT profile pictures allow users to confirm that the person they are interacting with is real.
In the same month, video game retailer GameStop announced it would close its NFT marketplace due to unclear U.S. regulations.
U.S. bookmaker DraftKings also took similar actions in July, shutting down its NFT operations, including its Reignmakers series and marketplace, citing "legal developments."
Additionally, the Layer 2 blockchain Immutable and the cryptocurrency exchange Kraken shut down their NFT marketplaces in August and November, respectively.
In December, Nike's NFT project RTFKT announced it would cease operations in January 2025.
The SEC issued Wells notices to NFT entities.
The SEC has intensified its focus on NFTs in 2024. On August 28, OpenSea CEO Devin Finzer stated in an X post that the securities regulator issued a Wells notice to NFT trading platforms.
Wells notices are formal notifications issued by the SEC indicating that it is considering enforcement actions against an entity. This notice indicates that the agency has completed its investigation and found evidence that may violate securities laws.
Finzer stated that the SEC accused NFTs on OpenSea of potentially being considered unregistered securities. The executive said the market is prepared to fight against any enforcement action from the agency, adding that the SEC's stance 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 their sale of Genesis Kongz NFTs in 2021.
The project stated that the SEC engaged with it using "concerning language," stating that tokens cannot be used in blockchain games unless registered as securities. CyberKongz expressed that the SEC's stance could have profound implications for blockchain gaming and pledged to contest these allegations.
NFTs faced seven months of stagnation in 2024.
NFT sales reflect broader challenges in 2024. Monthly sales peaked in March at $1.6 billion, driven by NFTs on Ethereum, Bitcoin, and Solana—the three most popular blockchains for digital collectibles.
However, the market has been steadily declining, with NFTs hitting a historic low in September, as monthly sales fell below $300 million for the first time since 2021. Total NFT transaction volume also dropped 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 18%, with sales around $356 million. In October, Solana-based NFTs also hit a historic sales milestone of $6 billion.
November saw even stronger performance, with monthly NFT sales reaching $562 million, the highest level in six months. Later this year, the recovery of NFT assets was again driven by Ethereum, Bitcoin, and Solana collectibles.
2025 NFT Forecast
While some may have given up on NFTs, professionals working in the field have various theories about a possible comeback.
RARI Foundation Strategic Director Jana Bertram stated in an episode of Hashing It Out podcast that NFTs could return in different forms. He acknowledged the drop in trading volume but believed the technology still holds value.
Bertram believes that NFTs can extend beyond digital art and collectibles to 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 increasing by 55% from October to November. He said:
"We have seen encouraging signs of adoption—from the first jewelry brand supported by Bitcoin to launch the Ordinals series, JVRN, to other well-known artists choosing to engrave their works on the world’s first blockchain."
Lai also shared that they are launching an Ordinals launchpad to enable creators to publish, engrave, 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 ahead," 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 by 2026, the crypto market could reach $10 trillion. If that is true, everything will be alright. This means that, based on the current market trading volume of NFTs, I believe its monthly trading volume will exceed billions of dollars as the entire market grows."
