The world of non-fungible tokens (NFTs) saw a glimmer of hope in December 2022, as the monthly trading volume of NFTs broke an eight-month streak of declines.
What Happened: According to data from The Block, NFT trading volume rose by 13% in December, reaching $549.5 million.
This was a welcome change for the NFT market, which had seen a steady decline in trading volume throughout the year.
The increase in trading volume could be attributed to a combination of factors, according to Thomas Bialek from The Block.
One of the main reasons was tax loss harvesting, a strategy used by investors to offset capital losses by selling assets at a loss before the end of the year.
This allowed investors to offset any capital gains they may have made earlier in the year, reducing their overall tax burden.
Additionally, the NFT market saw a revitalization of popular narratives around some of the blue-chip projects, most notably Yuga Labs, given its upcoming "Trial of Jimmy the Monkey" event.
Why It Matters: Despite the month-over-month increase in trading volume, it's important to note that it was still just a fraction of what it was a year ago.
In December 2021, NFT trading volume reached around $2.8 billion, highlighting just how much the NFT market had been impacted by the overall downturn in the crypto market.
Despite the overall downturn, the NFT market saw some notable successes in 2022.
In February, an NFT benefiting WikiLeaks founder Julian Assange sold for a whopping $52.7 million.
This record-breaking sale highlighted the potential of NFTs to be used for charitable causes.
Additionally, NFTs from Yuga Labs topped the list of the most expensive NFT sales last year, further cementing the project's place in the NFT market.
The NFT market saw a small increase in trading volume in December 2022, ending an eight-month streak of declines.
Notably, while this was a positive development, trading volume is still far below what it was a year ago.