The major drivers of NFT transactions are retail customers, enticed by the prospect of profit.
There’s little doubt that the developing crypto specialty of non-fungible tokens (NFT) was one of the best-performing sectors in 2021, with an extraordinary increase in transaction volume and adoption rate.
While institutional investors have contributed to the market’s continuous expansion, according to a recent Chainalysis analysis, retail purchasers accounted for 80% of NFT transactions so far this year, with collectors and institutions driving the large quantities observed in the field.
Retail purchasers dominate the NFT market
According to the Chainalysis article “The 2021 NFT Market Explained,” accessible on-chain data from January to October 2021 revealed that retail NFT transactions amounted to over 80% of all transactions, while collector-like transactions accounted for 19%.
Collector-sized sales were just 6% in March, but by the end of the year, they had risen to 19%. This indicates that the place continued to pique people’s curiosity as the year progressed.
Institutional investors only accounted for 1% of transactions, according to Chainalysis, but they made up for it with their trading volume, which was about 26% over the period.
The blockchain analytic organization explained how it developed the parameters to categorize each transaction, claiming that transactions under $10,000 belonged to retail customers. Transactions in the $10,000-$100,000 range were classified as collector those, while transactions beyond $100,000 were classified as institutional transactions.
According to the report, the data suggests that the NFT market is significantly more retail-driven than the regular cryptocurrency market, where retail transactions make up a small fraction of total transaction volume.
The allure of profitability drives interest in NFTs
While many people engage in crypto to hedge against inflation and make more money, NFTs are largely motivated to benefit from their investments in initiatives in the field. However, available data indicates that not all NFT investments result in returns for investors.
Only about 29% of NFTs acquired during minting and sold on the platform made a profit, according to Chainalysis. If a freshly created NFT is allowed, however, the chances of generating a profit grow to 75.7 percent.
Whitelisting is the process of having a crypto wallet address pre-approved for a future NFT mint (also known as a “drop”), according to NFTSKA.
Chainalysis said definitively, it’s practically difficult to obtain outsized profits on minting purchases without being whitelisted, based on the available data.
It’s worth noting that interest in NFTs has resurfaced in recent weeks, following Facebook’s rebranding as Meta, which revealed that the company’s new focus would be on how to get more people into the metaverse. The sale of virtual real estates properties such as land and other virtual assets totaled over $300 million in the previous seven days alone.