Review of the NFT Sector in 2024 and Outlook for 2025

Author: Ezra Reguerra, CoinTelegraph; Translated by: Deng Tong, Jinse Finance

Despite facing some significant setbacks, non-fungible tokens (NFT) will remain an indispensable part of the Web3 space in 2024. Industry commentators and professionals insist that the utility of NFTs remains intact, bringing optimism for a recovery.

Although the media occasionally declares that NFTs are dead, holders continue to trade, and data tracker CryptoSlam shows that NFT sales this year are approximately $8.5 billion.

Sales volume may be lower than in previous years, but the number of buyers has increased from 4.6 million in 2023 to 7.5 million in 2024, a growth of 62%. This is also 37% higher than the 5.4 million unique buyers recorded in 2022, a year widely regarded as the peak of NFTs. Therefore, although trading volume may have declined, the demand for this asset class is still growing.

Despite the fact that this field has existed for some time, it is undeniable that NFT holders have been hit hard this year, from seven consecutive months of decline and major projects exiting the space, to the U.S. Securities and Exchange Commission issuing Wells notices to NFT projects.

In 2024, NFT projects face a severe setback

In January this year, the social media platform X canceled support for NFTs. The previous year, the platform allowed paid users to link NFTs to their profile pictures. One community member called this the "last straw" for NFTs, while another stated it was "another stain" on the industry.

Some people question the decision to remove this feature, arguing that it provided real utility for users and raised issues around bot accounts and scammers. One community member stated that NFT profile pictures allow users to confirm that the person they are interacting with is real.

In the same month, video game retailer GameStop announced that it would shut down its NFT marketplace, citing unclear U.S. regulations.

US sports betting company DraftKings took similar measures in July, shutting down its NFT business including the Reignmakers series and marketplace, citing "legal developments."

In addition, the second-layer blockchain Immutable and the cryptocurrency exchange Kraken closed their NFT marketplaces in August and November, respectively.

In December, Nike's NFT project RTFKT announced that it will cease operations in January 2025.

SEC Issues Wells Notice to NFT Entities

The SEC has intensified its focus on NFTs in 2024. On August 28, OpenSea CEO Devin Finzer stated in an X post that the securities regulator has issued a Wells notice to NFT trading platforms.

A Wells notice is a formal notification issued by the SEC indicating that it is considering taking enforcement action against a certain entity. This notice signifies that the agency has completed its investigation and found evidence that may indicate a violation of securities laws.

Finzer stated that the SEC's allegations that NFTs on OpenSea may be considered unregistered securities. The executive mentioned that the market is ready to fight against any enforcement actions from the agency and added that the SEC's stance on NFTs would "stifle innovation" on a larger scale, putting artists and creatives at risk.

On December 16, the NFT platform CyberKongz received a Wells notice from the SEC. The CyberKongz team stated that the issue originated from its sale of Genesis Kongz NFTs in 2021.

The project stated that the SEC contacted them with "concerning language," claiming that tokens cannot be used in blockchain games without being registered as securities. CyberKongz indicated that the SEC's stance could have far-reaching effects on blockchain games and vowed to contest these allegations.

NFT Faces Seven Months of Slump in 2024

NFT sales reflect broader challenges in 2024. March saw the highest monthly sales at $1.6 billion, driven by NFTs on Ethereum, Bitcoin, and Solana—the three most popular blockchain platforms for digital collectibles.

However, the market is steadily declining, with NFT reaching a historical low in September, as monthly sales fell below $300 million for the first time since 2021. The total transaction volume of NFTs also dropped from 7.3 million in August to 4.9 million in September.

After the market fell to its lowest point, NFTs reversed their trend in October, growing by 18%, with sales amounting to approximately $356 million. In October, Solana-based NFTs also set a historical sales milestone of $6 billion.

The performance in November was even stronger, with monthly NFT sales reaching $562 million, the highest level in six months. Later this year, the recovery of NFT assets was once again driven by Ethereum, Bitcoin, and Solana collectibles.

2025 NFT Predictions

Although some people may have given up on NFTs, professionals working in the field have various theories about its possible return.

Jana Bertram, the strategic director of the RARI Foundation, stated in an episode of the Hashing It Out podcast that NFTs may return in different forms. He acknowledged that trading volumes have declined but believes that the technology still holds value.

Bertram believes that NFTs can extend beyond digital art and collectibles, expanding into practical applications such as authentication, ownership records, and healthcare documentation.

When asked about the prospects of Bitcoin NFTs in 2025, Lennix Lai, the Global Chief Business Officer of OKX, stated that these assets are entering a new growth phase. He shared that their trading data reflects a recovery, with the trading volume of Ordinals increasing by 55% from October to November. He said:

"We have seen encouraging signs of adoption—from the first jewelry brand supporting Bitcoin to launch the Ordinals series, JVRN, to other options where renowned artists have chosen to engrave their works on the world's first blockchain."

Lai also shared that they are launching an Ordinals launchpad to enable creators to publish, mint, and trade collectibles on Bitcoin. "With these fundamentals and broader market tailwinds, we believe the Bitcoin NFT movement is still in its early stages and has huge growth potential in the future," Lai said.

At the same time, Animoca Brands Executive Chairman Yat Siu pointed out that the NFT market will become larger than in 2021 and 2022. He believes that as the crypto market grows, every component within the Web3 space will grow accordingly:

"Standard Chartered predicts that by 2026, the crypto market could reach $10 trillion. If this is true, then everything will be fine. This means that, based on the current market transaction volume of NFTs, I believe their monthly transaction volume will exceed several billion dollars as the entire market grows."