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Just 28.5% of NFTs Purchased on OpenSea During Minting Resulted in Profit

NFTs have become a novel investment offering. But few are able to turn their investments into profits.

Non-Fungible Tokens (NFT) have appeared like a second wind for artists. They took over the crypto world by storm and also enabled GameFi and Metaverse.

The Chainalysis 2021 NFT Market Report has summed up the findings from 2021. This research has primarily studied the transactions on OpenSea with the assumption that it is one of the most popular NFT marketplaces. So, it can provide a substantial amount of data about the NFT space.

In 2021, users sent over $44.2 billion worth of cryptocurrency to ERC-721 and ERC-1155 contracts, the two Ethereum smart contracts associated with NFT marketplaces and collections.

NFTs Transaction Value

One can observe in the figure above that a significant increase was recorded in both total value sent and average transaction size. It means more users are investing more money in NFTs.

CryptoPunks, established in 2017 well before the NFT boom, is the most popular NFT collection during the period studied, having more than $3 billion in transaction volume since March 2021.

Geographical Distribution of Web Traffic on OpenSea

It is clear that currently, the Central and Southern Asia region is sending the most traffic to NFT marketplaces, followed by North America, which has seen an upward trend in recent times.

But no region makes up more than 40% of monthly web visits since March 2021.

Surge in NFT Collections

Active collections are those which have had at least 1 transaction.

Data conveys that since July 2021, NFT collections have skyrocketed on OpenSea, which is one of the largest NFT marketplaces.

Over 6,000 NFT collections on OpenSea have undergone at least one transaction, including buying, selling, or minting.

As seen in the graph, by the end of 2021, 3,264 NFT collections were ‘active’ on OpenSea i.e. they had at least one transaction.

Transaction Size and Volume

NFT Collector-sized transactions – those between $10,000 and $100,000 worth of cryptocurrency – have risen to account for 10% of all NFT transactions.

But, retail transactions account for the bulk of the activity. Contrary to this, Institutional transactions account for just 0.6% of all transfers.

However, the scenario flips when we see transaction volumes. Under this parameter, Collector-sized transactions make up 60% of all. They are followed by Institutional transactions at 30% and Retail transactions come at last, forming 10% of all transactions.

Turning Profits from NFTs

Transaction data from the OpenSea reveals that just 28.5% of NFTs purchased during minting result in profit.

But buying NFTs on the secondary market from other users and flipping them leads to profit 65.1% of the time.

Whitelisting is the key to success. OpenSea data shows that users who make it to the whitelist of any sale gain a profit 75.7% of the time, versus just 20.8% for users who do so without being whitelisted.

Furthermore, it is highly unlikely to achieve outrageous returns on minting purchases without getting whitelisted.

78% of the sales by unwhitelisted buyers result in a loss on resale. 

On the contrary, 78% of sales by whitelisted buyers result in a profit, with 51% getting a 2X return.

NFTs have ushered in a new era and class of investment. Earlier art galleries used to hold auctions where a very limited number of artists and buyers could participate. Crypto has democratized the process. Today an art creator can list the work on any marketplace and can reach potential buyers.

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