Every week we offer several indicators to better understand the market. Have you noticed at times we report unusual activity?
besancia · 01/31/22 · 4 min · Beginner
Every week, we analyze the statistics and activity of the Non-Fungible Token (NFT) market from the previous week. This allows us to share the state of the market and offer you an independent on-chain reading of the data thanks to several indicators.
We have separated the market analysis into two parts:
Dapp activity can sometimes be misleading, which is why when we talk about USD sales, we will focus exclusively on sales activity.
Here are the definition of the terms we use in the Weekly stats:
Having a visualization of the data makes reading easier, but may require some explanations to actually understand it. Indeed, some activities can be misleading and in order not to fall into FOMO, here are some explanations to better understand what is happening.
As explained above, the dapp activity concerns all the activity related to a project. Each week, we present 5 projects that stand out the most from the rest of the market’s activity according to two indicators: the number of transactions and the number of active addresses.
By crossing these two indicators, it makes it possible to know if the number of addresses is disproportionate to the number of transactions carried out.
In the example above, the Creepz project has 5 times more transactions than active addresses. That’s why we posted a sign indicating abnormal activity. This does not necessarily mean that this activity is entirely artificial. But this is unusual compared to what we can usually see. We encourage you to do further due diligence when you see this sign appear.
This indicator is based on the 20 projects that had the most buyers or sellers in the past week. This indicator can vary greatly from week to week. If 20 projects launch on week 1, then 10 on week 3, and 5 on week 4, the activity of weeks 3 or 4 may seem very low.
Knowing the number of buyers versus the number of sellers over the past week serves two purposes.
The first, to know if we are in a bullish or bearish phase. Indeed, as long as the number of buyers exceeds that of sellers, it can display good health of the market. Conversely, if the number of sellers were to exceed the number of buyers, it could mean that users want to leave the market.
The second thing is to have a global view of the history of the projects that brought together the most buyers and sellers in the past week. Is there strong hype on some projects? Are they overvalued? What was the number of buyers and sellers present in the previous week’s projects?
The information of the number of buyers and sellers can be cross-checked with that of Dapp Activity. This helps to better understand whether this trend is consistent with the best performing projects.
Our most viewed indicator: the 5 projects that generated the largest USD volumes thanks to last week’s sales. This indicator takes into account only sales, transaction costs are not counted.
It is therefore interesting to note that some projects that appear in this weekly statistic are absent from the one on the Dapp Activity. For example, despite a very large volume of transactions for the Creepz project, it did not generate sufficient USD volume to arrive in front of Metroverse.
Conversely, the Azuki project was particularly successful despite an absence in our Dapp Activity indicator.
The NFT market can be particularly difficult to follow with the weekly appearance of new projects. Accompanied by often very aggressive communications and marketing of projects, the feeling of “missing the train” can be omnipresent.
Since the summer of 2021, we have seen many projects launch with very strong activity but this has not followed in time. If you’re thinking of investing in a long-term project, the launch hype doesn’t matter.
Doing your own research on the teams and their ability to carry a project to the end is the most decisive element for its success. Success, or Gonna Make It (GMI), is not calculated over a single week but over several years.
The projects that were set up during the 2018 bear market are currently still in beta and each step of their roadmap takes longer than announced. This is normal, the use of NFTs is still very young. Many seem to forget that and that’s why we keep reminding ourselves: don’t give in to FOMO, do your own research before investing in a project.
Having only money as a driver is not sufficient for long term success. If you aspire to build the web of tomorrow, the infamous Web3 a personal investment of your time in projects is necessary. Without an exchange between project creators and their community, what is the real value of any NFT project?
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