Source: Cointelegraph Original: "{title}"
Despite a surge in momentum in the last few months of 2024, NFT trading volume fell by more than 60% last month compared to December, coinciding with a downturn in the cryptocurrency market.
DappRadar analyst Sara Gherghelas stated in an industry report on March 6 that the total trading volume of NFTs reached $1.36 billion in December, but fell by 26% month-on-month in January and then dropped another 50% in February.
She said, "Although NFTs have shown signs of recovery in recent months, their growth momentum has slowed since the beginning of this year."
Gherghelas attributed the decline in NFT valuations to their correlation with cryptocurrency prices.
Before the decline at the start of the new year, NFT trading volume had been steadily increasing in the second half of 2024. Source: DappRadar
According to CoinMarketCap, the total market capitalization of the cryptocurrency market hit a historic high of $3.71 trillion on December 9 last year, with many cryptocurrencies also seeing significant price increases.
On January 20, Bitcoin briefly soared above $109,000, surpassing the previous all-time high of $108,000 set on December 17, just before U.S. President Trump’s inauguration.
However, much of the gains in the cryptocurrency market in February were lost due to escalating macroeconomic uncertainty caused by Trump's tariffs on U.S. trading partners.
The activity of decentralized applications also cooled in February, with the total number of daily unique active wallets estimated to have decreased by 8%, down to 24 million.
However, DappRadar noted a trend reversal in NFT activity, with a 6% increase in NFT engagement in February, as 3.5 million users interacted with NFT platforms, while interest in AI-driven assets grew.
Gherghelas stated, "Artificial intelligence is increasingly being integrated into NFT projects, marking a shift towards more dynamic, interactive, and practical digital assets."
She added, "The evolving market landscape indicates that while speculative trading may experience volatility, NFTs with strong utility, user engagement, and real-world applications will drive long-term adoption in the Web3 space."
It has been shown that profile picture NFTs are the most popular, generating $243 million in trading volume from 76,385 transactions.
Gaming NFTs ranked second in trading volume, reaching $41 million, with 421,853 assets traded. Sports NFTs dominated in sales, with 659,097 transactions and a trading volume of $7.7 million.
In February, profile picture and gaming NFTs had the highest trading volume within individual NFT categories. Source: DappRadar
A report released by DappRadar in January found that 2024 is set to be the worst year for NFTs since 2020, partly due to market volatility and rising token prices, with NFT trading volume at $13.7 billion and sales below $50 million that year.
According to DappRadar, 2022 was the best year ever for NFTs, as they entered the mainstream market for the first time, with trading volume reaching $57.2 billion and market sales totaling 121.7 million transactions.
Related: NFT Storm: Monad, Sonic Lead New Wave, Capturing the Next Alpha Opportunity
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