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The ongoing digital collectible art or non-fungible tokens (NFT) boom continues to fuel the cryptocurrency art sector, with more participants entering the ecosystem. The magnitude of the frenzy is highlighted by the trading volume on major NFT marketplaces.
Data acquired by cryptocurrency trading simulator Crypto Parrot indicates that the all-time trading volume of the ten leading NFT marketplaces has hit $1.63 billion as of May 4, 2021. NBA Top Shot attained the highest trading volume at $549.71 million, followed by OpenSea with a volume of $414.24 million. The two marketplaces account for more than half of the trading volume at 59%. CryptoPunks ranks third with a volume of $299.16 million.
Additionally, NBA Top Shot has the most significant number of traders among the top ten marketplaces at 357,114. AtomicMarket ranks second with 239,284 traders. The traders on the two platforms represent about 72% of the 824,894 total traders by the top ten marketplaces. Elsewhere, OpenSea had 108,990 traders as of May 4.
As NTFs continue to take center stage in the cryptocurrency space, they enable digital artists to profit from their work by making an otherwise public good into private property. As artists generate unique art collectibles, fans can own them, fuelling activity on the marketplaces.
The popularity of crypto art lies in the ability to securely value, purchase, and exchange digital art using a digital ledger. NFTs popularity is also powered by the fact that artists, including professionals, can prove ownership of their works through digital signs supported by blockchain technology. It, therefore, eliminates illegal duplication of digital works.
The trading volume has coincided with new investors jumping into the NFT marketplaces helping drive prices higher. Tremendous interest from newcomers alongside the desire of current owners to keep their assets has resulted in a phenomenon of scarcity in the market.
The all-time high trading volume follows a turbulent year when the coronavirus pandemic resulted in a slump in physical art sales. NFT-based art took off fuelling activity on the highlighted marketplaces in the absence of physical art sales.
Due to the growth of crypto art, famous traditional auction houses have also acknowledged the shift and are now utilizing existing marketplaces. With some auction houses commanding a considerable following, the fanbase is bound to influence the trading volume on the marketplaces. Recently, the leading auction house, Sotheby's, announced that it will accept bitcoin and ether for an upcoming auction of a Banksy painting.
The trading volume has also been powered by strategies taken by some of the marketplaces. Most marketplaces are working towards lowering the cost of minting and buying NFTs to promote more involvement by traders. For example, platforms like NBA Top Shot are simplifying the process of trading NFT. Transactions are not carried out in cryptocurrencies, but regular dollars simplifying entry by traders.
Additionally, NBA Top Shot also ranks as the leading marketplace banking on the popularity of the NBA league alongside the platform's nature of the operation. Notably, highlights by Top Shot do not give the buyer exclusive rights since anyone can watch it online and download it.
In addition, each TopShot is released in several editions, with a different number attributed to each one hence the popularity. The NBA Top Shot is also banking nostalgia among fans who owned physical NBA players' cards back in the '90s. The emergence of blockchain-based digital collectibles changes the way NBA enthusiasts and investors collect and sell sports cards.
Although the crypto art sector is booming, it still faces several challenges that need to be addressed to sustain its current popularity. Therefore, to unlock the full potential of NFT, the focus should be on making them creative, widely available, and easy to share alongside being affordable
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