Annual NFT Market Review: Is NFT the Best Choice for Developers in 2023?
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Annual NFT Market Review: Is NFT the Best Choice for Developers in 2023?
How did the NFT sector perform annually after experiencing explosive growth in 2021 and rapidly cooling down during the 2022 bear market?
Navigating Web3 tides with focused insights
In this bear market, reviewing the past year's performance reveals that all sectors are significantly more subdued compared to last year’s bull run. Total trading volume, transaction value, market cap, and TVL—all common metrics—reflect current market lows. However, data on developer count and user numbers indicate high market activity and rapid industry development.
We clearly recognize that developers continue innovating during bear markets, and Web3 has accumulated deeper technological advancements and products amid downturns. Today, we’ll review the NFT sector, which saw explosive growth in 2021 but cooled rapidly in 2022’s bear market, analyzing its annual performance. From these insights, we can identify promising directions in the NFT space for 2023 and strategic opportunities developers should consider now.
2022 NFT Market Review
To better understand the full-year NFT market landscape in 2022, we aggregated data from platforms such as NFTGO and referenced annual reports from Footprint and Ancient8. This article reviews both industry-side metrics like total trading volume and search trends, and user-side data like active users. Let's first examine total NFT market capitalization. According to NFTGO, the total NFT market cap peaked in early 2022, specifically in February and March. After the peak, the overall market cap declined and is currently hovering around $22 billion USD.
Compared to the explosive highs of 2021, monthly NFT market caps in 2022 remained consistently low, averaging less than $500 million USD per month.
Trading Volume
From a trading perspective, the NFT market experienced two peaks over the past year: January 13, 2022, and May 1, 2022. The first week of May reached $1.8 billion in sales—the annual high—before entering a prolonged decline. Current daily NFT trading volume hovers around $60 million USD.
After peaking, the NFT market continued declining through year-end with no clear signs of recovery, largely due to macroeconomic headwinds and a series of black swan events in the crypto space—Terra, Celsius, 3AC, and FTX. The NFT market trended downward under the influence of broader market conditions.
Contrary to declining trading volumes, the number of holders and traders has steadily increased—an indication of active user engagement despite poor market conditions. This signals a positive trend: the market continues to grow its user base even in a downturn.
Search Volume
By year-end, global NFT search volume had dropped about 90% from its January peak, reflecting cooling interest in digital collectibles during the bear market. Google Trends measures NFT search interest on a scale of 1–100, with 100 being the peak. Search trends generally mirror movements in the overall NFT market cap.
Regional Interest in NFTs in 2022
According to Ancient8’s NFT report, four out of the top five regions most interested in NFTs are in Asia, with one in Africa. China leads globally in Google searches for "NFT." Although domestic regulations have tightened around what are often called “digital collectibles,” user interest in the NFT space remains strong.
NFTFi
As the name suggests, NFTFi combines NFTs and DeFi, enabling financing for trades by using NFTs to unlock liquid assets. The integration of DeFi and NFTs opens new possibilities for NFT holders by enhancing asset liquidity. NFTFi innovations allow owners to put idle digital collectibles to work and generate returns, increasing their liquidity. Notable use cases include NFT fractionalization, leasing, derivatives, and lending. While NFTFi addresses liquidity challenges, it remains vulnerable to exploits and pricing inefficiencies.
However, according to available reports, NFTFi failed to meet expectations in 2022, mainly due to the overall market downturn and reduced liquidity. Nevertheless, blue-chip NFTs (BAYC, CryptoPunks, Azuki, Moonbirds) maintain substantial market value—totaling around $3.5 billion—which continues to motivate builders and attract new developers. The following chart shows the current NFTFi market landscape.
Trading Platforms
The six major players in the NFT marketplace ecosystem are OpenSea, Genie, Gem, LooksRare, Blur, and X2Y2. OpenSea maintained its dominant position, leading the NFT market in the first half of 2022 with record-breaking trading volumes of $3 billion in February and April. However, 2022 also saw several emerging challengers. The newly launched X2Y2 entered the NFT marketplace scene and quickly gained significant attention. In July at its peak, X2Y2 achieved a staggering $170 million in trading volume, becoming the second-largest player in the space.
NFT marketplace trading volume in 2022 (Source: Dune Analytics)
Beyond X2Y2, another rising star, Blur, delivered standout performance. Blur is a trader-focused NFT marketplace backed by Paradigm. Despite launching later, Blur surpassed OpenSea in December to become the leading NFT trading platform, capturing over 50% of the market share.
Beyond these figures, various reports offer more granular data such as weekly sales. Overall, however, the conclusion remains consistent: impacted by macroeconomic conditions, 2022’s key metrics fell below 2021 levels, showing a continuous decline. Yet indicators like trader count, developer activity, and platform innovation reveal a hidden layer beneath the surface—the NFT market continues to build momentum beneath the ice, awaiting its next breakout moment.
PFP NFT Projects
Among NFTs, the most prominent and popular category is PFP projects. PFP (Profile Picture) NFTs are digital avatars used on social media platforms such as Twitter, Facebook, and Instagram to signal social status or community affiliation. This cultural phenomenon propelled PFP NFTs to unprecedented popularity. PFP NFT prices vary widely, with Bored Ape Yacht Club (BAYC) and Moonbirds currently commanding the highest valuations. PFP NFTs remain highly lucrative this year, with total sales already exceeding $5 billion USD. In addition to reviewing aggregate market data, we’ve compiled a list of notable PFP NFT projects that stood out in 2022.
Bored Ape Yacht Club
Initially minted in April 2021 at 0.08 ETH, this collection of approximately 10,000 ape-themed NFTs is considered one of the most successful NFT projects ever. BAYC currently trades at 68 ETH each, with total sales reaching 717K ETH. Its strongest monthly performance was in April, generating 41.9K ETH in sales.
Azuki
One of the hottest NFT projects in 2022, Azuki demonstrated exceptional community growth and resilience during the bear market. Launched in January 2022, it features a collection of 10,000 anime-styled avatars. Within a month of launch, Azuki achieved $300 million in sales, briefly surpassing both CryptoPunks and BAYC in total sales volume. Popularity peaked in late March 2022, with floor prices nearing 40 ETH.
Moonbirds
Described as "utility-enabled PFPs with uniquely rich and rare traits," Moonbirds captivated the community with its compelling pixel-art design and the reputation of PROOF Collective. After launching in April 2022, Moonbirds achieved $238 million in total sales, ranking among the highest-grossing NFT projects in history. To date, the top 10 Moonbirds sales have each exceeded 100 ETH, with the most expensive sale reaching 350 ETH.
Valhalla
Positioned as a "crypto-native brand for global gamers," Valhalla gained massive traction on social media toward the end of 2022. Its 10,000 PFP avatars, minted in November, became highly sought after in secondary markets, ranking among the top three alongside CryptoPunks and BAYC. Valhalla now has 3.4K unique owners and a total trading volume of 11.6K ETH.
Reddit Collectible Avatars
A collection of 40,000 avatars launched by Reddit, this project marked one of the first real-world examples of a Web2 social media giant bringing NFT PFPs into the mainstream. Notably, Reddit used the term "digital collectibles" instead of NFTs. At launch, Reddit successfully sold out all digital avatars and created 2.5 million Reddit Vault wallets on its marketplace. A highly accessible platform combined with affordable pricing (around $10) helped the series achieve millions in sales, totaling $12 million.
Outlook for 2023
Looking back at the past two years, the NFT market has made tremendous progress. 2021 brought explosive growth and mainstream attention; despite market setbacks in 2022, the sector continued evolving upward, accumulating valuable technology and product developments. As we look ahead to 2023, what trends will shape the NFT space, and where can developers find opportunities?
PFP NFT Trends
Based on the standout PFP trends discussed earlier, PFP NFTs will remain popular within communities and ecosystems. Data shows a 509% year-over-year increase in user interest in PFP NFTs in 2022, bringing monthly search volume for the term to around 1.8K searches. Given their strong communities, unique utilities, strategic partnerships, and collectible value, PFP NFT projects are expected to maintain momentum in 2023.
Artificial Intelligence and Fractionalization
The convergence of AI and NFTs may unlock significant potential in 2023. AI attributes will enable more unique and dynamic NFT experiences. Additionally, NFT fractionalization is an emerging trend worth watching. Fractional ownership increases liquidity for high-value NFTs, offering investors greater portfolio flexibility. Improved liquidity could lead to more stable long-term growth.
Web2 + NFT
The 2022 Qatar World Cup, though over, left behind numerous NFT initiatives—including Coca-Cola’s NFT airdrop. Web3 gaming company Limit Break has announced plans to offer free mints during next year’s Super Bowl. Web2 + NFT already has proven success cases, with major Web2 companies actively exploring and launching NFT projects.
Leveraging the unique properties of NFTs, both Web3 and Web2 industries are using them for marketing, bridging physical and digital media to engage consumers. Beyond marketing, the integration of NFTs with Web2 games, brand IPs, and intellectual property showcases diverse functionalities and use cases. Reddit allows NFT avatar integration, Twitter enables NFT profile picture display, and Instagram supports minting and publishing image content as NFTs.
NFTFi
The potential of NFTs in financial services remains significant. The combination of DeFi and NFTs enhances market liquidity and offers richer investment options, attracting more crypto users. Therefore, NFTFi will remain a key focus in 2023. Exploring NFTFi and unlocking new possibilities will provide developers seeking entry points into NFTs with a promising and advantageous field.
Conclusion
Despite the shocking 92% drop in NFT market size, we cannot conclude that the NFT sector is collapsing. In fact, bear markets often allow projects with real value and technological promise to rise, creating new possibilities for the crypto world. 2022 welcomed exciting projects across domains—Azuki, Moonbirds, Skyweaver, DigiDaigaku—spurring the emergence of new platforms like X2Y2 and Blur. Looking ahead to 2023, promising avenues such as NFTFi and AI + NFT continue to unfold.
Although the current crypto landscape remains depressed amid the bear market, the potential and prospects within the NFT space remain boundless. From a user perspective, 2022 was not diminished by falling market values; rather, it can be seen as a year of sustained momentum following the NFT boom—a remarkably successful year for NFTs.
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