Why is it still early?!
See my NFT bullish thesis and why to be excited for what is coming!
I typically write on Sunday/Monday about the previous week's events.
This time I will go deeper on a single topic to remind us how early we are. Many see the massive success of BAYC and try to find and flip the next apes. However, even apes needed their time to achieve this success - they will celebrate their first anniversary this month.
I will explain why it is still early and why the best is yet to come. I will show you three major onboarding phases we have experienced in the NFT space since early last year and explain why I believe the fourth phase will be even bigger.
Long-term NFT bullish🔥 why?
The NFT market is still so small. There are currently less than half a million monthly active users on OpenSea. This number of NFT users will dramatically rise in the future. Why do I think so?
The onboarding goes in phases
Everything goes in cycles. So far, we have experienced three major phases in larger onboarding into the NFT space.
Three onboarding phases (measured by monthly active users on Opensea) March 21 - from 15,000 to 50,000 August 21 - from 60,000 to 220,000 January 22 - from 350,000 to 550,000 Next?
In March 2021, the number of active users tripled within a month. These were the pre-ape times when many of us joined the space through NBA Top Shots. March was also when Beeple sold his 5000 days for $69 million and 3LAU his music NFT collection for $11.6 million. Suddenly, all media talked about NFTs, trying to explain what it is and why it is a bubble😊. The space was tiny and way before any celebrities started aping in. We had no software tracking floors, so one of the community members - Zeneca_33 - was doing it manually and shared it daily on Twitter. It was fun. The trading volumes in the upcoming months were slightly declining, so we didn’t talk about money because we didn’t expect much. Until the NFT summer, when a new phase started.
In August 2021, the number of active users tripled. And it was wild again. Floor prices of Apes, CryptoPunks, and many other NFT projects were flying. More NFTs, including apes, were about to be auctioned at Christie's and Sotheby's. Celebrities started talking about NFTs, and people were buying anything that looked like an ape, saying it was the future. The space grew from roughly 60,000 actively trading users to 220,000 within a month. And then the volumes remained relatively stable. Until late November, when we experienced a new wave of the wild ride.
In late November 2021, we experienced the third onboarding phase when many people bought their first NFT. Indeed, the space doubled from less than 300,000 to nearly 600,000 in late January 2022. And it was another wild bull run, as we like to call it when floors of projects are experiencing a massive surge. Most of us remember it, so there is no need to go deeper on this one. So, why do I think the space is still so small? Let's zoom out.
Why the best is yet to come?
There are 4.95 billion internet users in the world today. About 300 million people own a cryptocurrency. More and more people no longer question the importance of cryptocurrency and agree it is the future. Crypto.com predicts that the number of crypto users will break one billion by this year. Though this might be too bullish, we probably agree on the growing direction. We are heading there.
Coinbase currently has 89 million users, which is expected to continue growing. Indeed, similarly to Crypto.com, they are ready to onboard the first billion people into the crypto economy. If we agree on this, they will inevitably keep onboarding tens of millions of users in the upcoming months and years. And they just announced they are partnering with BAYC to create film series to help audiences understand the nature of web3. We all heard about their upcoming NFT marketplace, right?😏
Massive onboarding through crypto exchanges
Once again, there are only about 500,000 actively trading users on OpenSea. Coinbase will do everything to become a leading NFT platform, and they are getting ready for massive onboarding. Users will be able to use credit cards, and Coinbase will even do the custody to make it as easy as possible (we can discuss decentralization some other time😊)…
While I don't expect an immediate effect, it can be a catalyst for the next phase in the midterm. If Coinbase manages to convince only 1% of its users to buy their first NFT, it will bring almost 1 million new people. One million people into 0.5 million NFT market - that's wild! This means a triple increase to 1.5 million. Just think about if 1 million people suddenly need to buy their first PFP? Whoaaa, so exciting!
Let’s see the numbers again: March 21 - from 15,000 to 50,000 August 21 - from 60,000 to 220,000 January 22 - from 350,000 to 550,000 Next? - from 450,000 to 1,500,000 ????
I am very bullish long-term and believe we have years of growth ahead. Considering the numbers, it doesn't make sense to think the other way. I always recommend thinking long-term and choosing projects that focus on creating value over time. And keep learning and enjoying the journey. We know how fast this space is, and I think it gets even faster😊 until… we start to specialize. Each of us chooses our favorite category, such as music NFTs, virtual worlds, gaming, photography, wearables… and as the space grows, new niche segments arise. Talking about NFTs will eventually be like talking about the internet.
I hope you enjoyed this article, and feel free to DM me your thoughts. Wishing you a great week and please never stop learning!💙
Disclaimer: This is my opinion and my point of view. I am not a financial advisor, and this is not financial advice.