TLDR
- NFT trading has nosedived 63% since December, notably with February marking a 50% fall from January, plummeting to $498 million.
- Profile picture NFTs are leading with an impressive $243 million in trading, followed next by gaming NFTs at $41 million, and sports NFTs at a distant $7.7 million in trades.
- Even though the market is in a downturn, AI-powered NFTs are quickly gaining ground, with projects like Kaito Genesis showing remarkable expansion.
- February 2025 was marked by a record in crypto theft, with a whopping $1.5 billion stolen, mostly credited to the Bybit exchange hack which alone accounted for $1.4 billion.
- Web3 activities have slightly chilled with an 8% drop in daily active wallets, bringing the count to 24 million. However, AI-related decentralized applications witnessed a surge, with some growing over 700%.
Since the closure of 2024, the NFT realm has seen a stark 63% fall in trading volumes by February, coinciding with the overall instability in the crypto market.
Data from DappRadar Numbers revealed NFT trading volumes stood at $1.36 billion in December before decreasing 26% in January. February then followed with a massive 50% plunge to $498 million.
Sara Gherghelas, an analyst from DappRadar, says the downturn aligns with the interplay between NFT valuations and crypto price trends, highlighted when crypto market cap peaked at $3.71 trillion on December 9, 2024.
Bitcoin had a momentary leap above $109,000 on January 20, setting new records, but most gains dwindled by February due to uncertainties about Trump’s tariffs on trade partners.
The drop in NFTs mirrors a broader cooling in the world of decentralized applications. February saw a decrease in daily active unique wallets by 8%, landing at 24 million overall.
Despite declining trends, there were glimpses of optimism in NFT activities. User engagement on NFT platforms ticked up by 6% in February, coming to 3.5 million, indicating ongoing interest even with lower transaction numbers.
Profile picture (PFP) NFTs were February's market stars, achieving $243 million from 76,385 sales, with 99% utilizing the Ethereum blockchain.
As second in line, gaming NFTs achieved $41 million from 421,853 assets traded, while sports NFTs led in total sales with 659,097 transactions despite a lower volume of $7.7 million.
AI and Utility Amid the Decline
A promising area in the NFT scene is the alliance with artificial intelligence. AI-based NFTs are becoming a hit, offering more interactive and engaging utilities.
The Kaito Genesis collection, driven by AI and developed by Kaito AI, saw substantial growth in February. Riding high on collaborations, including a tie-in with Azuki NFTs, its floor price soared to 7.65 ETH.
Another standout is Tokenized Collectibles by Courtyard. The platform bridges the physical and digital by storing tangible items in secure locations and issuing NFTs on the Polygon network.
Dobby Fingerprints claimed the top spot for active traders, introducing an innovative way for NFT holders to unlock fingerprint keys, marking it as the 'world’s first Loyal AI model.'
February brought hurdles for Web3 as well. In DeFi (decentralized finance), total value locked reduced from $217 billion to $168 billion due to the capital outflow.
Crypto security faced a grim month in February. A massive $1.5 billion was lost to hacks, with the Bybit exchange breach alone accounting for $1.4 billion, marking the largest DeFi exploit period.
Nevertheless, AI-powered platforms within Web3 flourished. Some AI dapps enjoyed user growth beyond 700%, with LOL leading with 5.1 million active wallets.
Reflecting on 2024, NFTs endured their bleakest phase since 2020, tallying $13.7 billion in trading and fewer than 50 million sales, per DappRadar’s January insights.
This record starkly contrasts with 2022, a landmark year when NFTs surged into prominence, hitting $57.2 billion in trades with 121.7 million sales.
Experts in the field suggest that the future for NFTs hinges on their practical use over speculation. Gherghelas notes that while speculative trading can fluctuate, NFTs with concrete utility and real-world applications are likely to sustain long-term adoption in Web3.
The shifting NFT landscape hints at a maturing market. As initial excitement wanes, projects focusing on technological innovation or real-world usefulness stand the best chance of long-lasting success.
