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Expert Analysis
June 19, 2022

The Macro State of the NFT Market

Kyle Waters sees green shoots in the data despite the current downturn in crypto markets
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The Macro State of the NFT Market

In his General Theory, John Maynard Keynes surmised that “the difficulty lies not so much in developing new ideas as in escaping from old ones.” The crypto economy, like the broader macroeconomy, has developed in pronounced boom and bust cycles in its nascent history. As crypto markets face a new price crunch in 2022, current observers are tempted to draw comparisons with past cycles, especially 2018 when ETH fell from $1,380 early on to $82 by the end of the year. Until crypto-asset prices rose in late 2020, the intervening years were branded by some as a “crypto winter” — a period of prolonged inactivity in the crypto economy.

In 2022, crypto markets have once again been stricken with volatility, with the prices of Ethereum’s ETH and Tezos’s XTZ down 75% and 70% respectively. While the future remains uncertain, the blockchain’s information richness is also providing us with a steady stream of real-time data about the crypto economy and NFT market. Here, I weigh in on the macro state of the NFT market, addressing the key macro indicators to keep an eye on, while bearing in mind the history of the crypto market.


Close followers of the NFT market will be dialed into the health of the blockchains underpinning the most prominent NFT ecosystems, such as Ethereum, Tezos, and Solana. For brevity’s sake, I focus here on Ethereum, but the same sort of analysis is relevant to other blockchain networks.

One of the best high-level indicators of activity is active addresses/wallets (i.e. addresses that were involved in at least one transaction during the specified time interval). This is the closest thing that crypto has to an active user count. The daily number of active addresses on Ethereum has trended downward slightly in the last few weeks from around 550,000 per day in early May to under 500,000 in the first week of June.

Ethereum: Active Addresses (Daily). Courtesy of Coin Metrics

A similar trend is noticeable for weekly active addresses, which has fallen from ~2.5 million to 2 million over the last month. While monthly active addresses have fallen from ~7.5 million to ~6.5 million over the last month.

Ethereum: Active Addresses (Weekly/Monthly). Courtesy of Coin Metrics
However, you will note a stark difference between 2018’s drop-off in overall activity and that visible today.

In 2018, daily active addresses fell by over 50% in a matter of weeks from the local maximum price of ETH. While activity actually fell more following the cryptocurrency dive of May 2021. Though there is no denying the decline in activity in recent weeks, it remains unclear whether the crypto economy is in the midst of a full-blown recession.

Of course, the activity of addresses is only one metric, and a proxy at that. True usage would reflect the number of humans interacting in the network. Crypto users — and NFT collectors — often control multiple different addresses, while bots, exchanges, and other large services drive significant activity too. 

Peter Bock, Winter’s Fire, 2018, Courtesy of the artist

A Macro Outlook for the NFT Market

So how does this all translate to the NFT market? If the crypto economy is in recession, have purchases of digital goods (NFTs) fallen? 

Tracking sales and volume data on OpenSea, the largest marketplace on Ethereum, there are indications that the market is less robust. According to data from Dune Analytics compiled by Richard Chen, daily USD sales volume on the marketplace has averaged around $30 million since May 12, 2022, while volume last broke $100 million on May 10. Daily volume was regularly topping $100 million only a few months ago. 

But even as total volume has come down, total sales have started to rebound after a brief drop in early May. The number of sales on OpenSea hit 104,000 on June 2 — the third highest of all time.
OpenSea: Daily Number of Sales (not including the new Seaport contract). Courtesy of Dune Analytics

The natural conclusion is that the prices of some NFTs have come down, resulting in lower overall volume. Data from shows that most top projects have seen decreases in their lowest available listings (“floor” prices) over the last month.

There is a tenuous relationship between the NFT market and crypto prices. Because so many NFTs are priced in crypto terms, when the price of ETH or XTZ is rising, it can prompt would-be NFT buyers into holding rather than spending a quickly appreciating asset. For example, when ETH hit an all-time high price of $4,800 last November, NFT activity declined, only to start rising again as ETH retreated below $4,000. 

Another factor to consider when analyzing NFT market performance is transaction fees, which have tended to rise on Ethereum when the market is hot and fall after its price declines. As overall activity on the network has trended down, fees are substantially lower on Ethereum right now than they were last Fall or in the Spring of 2021, making it easier for new buyers to enter the market. A typical transfer of ETH cost as much as $15 in November, but has recently averaged $1.50.

Average Gas Fee on Ethereum by Transaction Type ($, 7D MA). Courtesy of Coin Metrics

Looking at other, more broad-based, metrics shows some interesting trends. The daily total transfer of NFTs following Ethereum’s ERC-721 standard (i.e. when a token is swapped between wallets) has risen sharply after a brief decline in early May. It has since fallen back following the volatile price action in June.

Daily Number of ERC-721 Transfers. Courtesy of Coin Metrics

Meanwhile, the number of transactions involving ERC-721 smart contracts has also hit new highs. On June 5, 2022 one in every four transactions on Ethereum involved NFT (ERC-721) contracts.

% Daily Transactions Involving ERC-721 Contracts. Courtesy of Coin Metrics
While this is encouraging data for Ethereum’s NFT ecosystem, there are caveats. Peering into the data, many of the contracts appear to be new projects, perhaps taking advantage of lower fees to deploy hopeful hits. Tezos has had no such wobble, with generative art marketplace fxhash seeing steady activity since the launch of version 1.0 on April 15.

What can we learn from 2018?

NFT infrastructure has come a long way since 2018. Many of the stalwarts of the crypto art movement launched during the proverbial crypto winter, including KnownOrigin (April 2018), SuperRare (May 2018), and MakersPlace (April 2019). Art Blocks, the leading market for generative art, only launched in November 2020. While Tezos — the proof-of-stake blockchain that hosts many popular NFT marketplaces — only launched on June 30, 2018. 

Not every marketplace survived the 2018-2020 winter though, with upstarts like OpenSea competitor Rare Bits shutting down in early 2020. 

The now defunct Rare Bits NFT marketplace. Courtesy of TechCrunch

Given how far crypto adoption has come, it’s difficult to imagine the current slump being as deep and prolonged as the crypto recession of 2018. That said, some NFT marketplaces may not withstand a downturn, even one mild in nature. For the crypto economy and NFT ecosystem to escape its history of prodigious booms and precipitous busts, there must be good reasons for users and collectors to stick around. Projects committed to longevity, or those embracing experimentation, are the likely candidates to move the space forward in the face of inevitable short-term gyrations.

While some are observing a flatlining of the NFT market, more nuanced research shows pockets of activity that are holding up well. Over the summer, I will be tracking closely the number of new collectors and artists entering the ecosystem to assess its long-term health going forward.

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Kyle Waters is a Research Analyst at Coin Metrics, a firm specializing in blockchain analytics and intelligence. He co-authors the Coin Metrics weekly newsletter “State of the Network,” alongside other long-form research content spanning the cryptosphere. He is a Data Science Contributor to ClubNFT and has been contributing to the art and technology blog Artnome since 2018.