More than 80% of all non-fungible token (NFT) transactions were worth less than $ 10,000 in 2021, according to Chainalysis, which it classified as “retail” in recent research.
A December 6th report by blockchain analytics firm Chainalysis entitled “The NFT market 2021 explains ” detailed NFT transaction trends throughout 2021. Chainalysis researchers examined on-chain data between January and October 2021.
While retail transactions accounted for more than 80% of all NFT transactions on any given day in 2021, collector-sized transactions rose from 6% in March to 19% by October 31, indicating an increase in larger collectors over the course of the year.
Institutional transactions accounted for less than 1% of all remittances, but 26% of actual trading volume over the period, she added.
A retail size transaction is worth less than $ 10,000 while a collector size transaction is worth between $ 10,000 and $ 100,000. An institutional-sized transaction is a transaction valued at more than $ 100,000, according to the study.
The graph below shows the dominance of retail transactions year-round from January through October, with a definite surge in collector-size transactions from September onwards.
Most of the total transfers were made in retail, but collectors and institutions have made up the lion’s share of NFT dollar-denominated transfers since March. Collector-size transactions accounted for 63% of the volume and institution-size transactions accounted for 26%, meaning retail remittances accounted for 11% of the volume for the period studied.
The researchers contrasted the NFT market with the broader cryptocurrency market, where retail transactions account for a far smaller proportion of total transactions.
“The data shows that the NFT market is much more retail-focused than the traditional cryptocurrency market, where retail transactions make up a negligible portion of the total transaction volume.”
The earnings potential associated with NFTs was one of several factors that drove the adoption of cryptocurrencies through 2021. This is evidenced by record sales of $ 17.7 billion in NFT sales expected by 2021, according to a report from Cointelegraph Research.
In the past week alone, NFT sales totaled $ 300 million, nearly a quarter of which came from Metaverse land purchases at The Sandbox.
In addition, according to Chainalysis, at least $ 26.9 billion in cryptocurrency has been sent to ERC-721 and ERC-1155 contracts (the industry-dominant Ethereum standards for NFTs) by 2021.
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Whitelisting is best for profit
Despite the huge amount of money being spent on NFTs, the report states that “only 28.5% of NFTs bought during minting and then sold on the platform make a profit”.
Chainalysis suggested being whitelisted to increase the odds of winning from a newly minted NFT. Users who whitelisted a mint event on OpenSea saw a profit 75.7% of the time, compared to the 20.8% who did so without being whitelisted.
“The data suggests that it’s nearly impossible to get oversized returns on coin purchases without being whitelisted.”
However, NFTs bought in the secondary market after minting “lead to a profit 65.1% of the time,” the report added, suggesting that it is better to wait for an NFT collection to reach a secondary market if you don’t make it onto the white list, as part of a mint event.