Wealthy collectors are leading the NFT market: Industry insiders reveal the truth about the market

Non-fungible tokens (NFTs) experienced a cooling off from their initial frenzy. From a peak monthly sales volume of $1 billion in 2021–22, it has now significantly decreased to approximately $300 million per month. Some predict the end of the NFT industry. However, Yat Siu, co-founder of Animoca Brands, offers a different perspective. He points out that the market is not dead by any means, but rather is being steadily driven by wealthy digital art enthusiasts.

The true market picture revealed after a single stagnation: maintaining a monthly trading volume of $3 hundred million

The downturn in the NFT market is clear in the numbers. The trading volume, which once exceeded $1 billion per month, has now fallen to about $300 million. On the other hand, this level is by no means negligible compared to the zero-dollar market five years ago. Siu comments, “Five years ago, this was a zero market. Everything is relative. Evaluations change depending on the perspective you hold.”

In fact, the market contraction includes a natural maturation process, including adjustments. Besides fluctuations in the overall cryptocurrency market, the main factors are the exit of speculative entrants. However, at the same time, there is solid demand at the core of remaining transactions.

For wealthy collectors, NFTs hold the same value as Picasso or Rolex

The current supporters of the NFT market are not short-term profit-seeking speculators but wealthy digital art enthusiasts. Siu himself states, “NFTs are popular among wealthy collectors. I am also a major collector and share similar views with my peers in this field.”

What is essential here is the nature of NFT purchasing behavior among the wealthy. Siu explains, “Picasso collectors feel a kinship with other Picasso collectors. They are part of a kind of club. This applies to Ferrari, Lamborghini, and Rolex watches as well. NFTs are just the digital versions of these.” In other words, for the wealthy, NFTs are more than investment products; they are status symbols and fulfill a sense of belonging within a community.

While Siu admits that his NFT portfolio has “fallen by about 80%,” the important point is that these are “not for resale but as significant long-term assets.” This perfectly exemplifies the investment philosophy of affluent collectors.

NFT projects favored by the wealthy: Otherside, Bored Apes, and the rise of emerging brands

Specifically, which NFTs are purchased by wealthy investors? Notable examples include Yuga Labs’ “Otherside,” which features Otherdeed Lands (NFTs representing land rights in a 3D blockchain-based virtual world), and Bored Apes Yacht Club. The fact that prominent investors like billionaire Adam Weitzman openly buy these NFTs suggests their status as luxury items.

Meanwhile, an emerging force to watch is Pudgy Penguins. This project is shifting its strategy from a traditional speculative “digital luxury item” to a multi-sector consumer IP (intellectual property) platform. It emphasizes acquiring mainstream users through toys, retail partnerships, and media, including viral media, and then onboarding them into Web3 (games, NFTs, PENG tokens). Currently, this ecosystem demonstrates diverse activities, including over $13 million in retail sales, more than 1 million units sold, and PENG tokens airdropped to over 5 million wallets.

New investment vehicles in the NFT business: emergence of market-neutral strategies

As the market matures, new investment methods are emerging. The BTC Alpha Fund, jointly raised by Sygnum Bank and Starboard Digital, has raised over 750 Bitcoins (equivalent to about $65 million at current rates). This market-neutral investment vehicle is gaining attention for its strategy that does not depend on price movements in any particular direction.

The fund achieved a net return of 8.9% annualized in the first quarter, aiming for an annualized return of 8–10% through systematic arbitrage strategies. Additionally, it is designed to function as collateral for Lombard loans through Sygnum, allowing investors to maintain liquidity without selling their Bitcoin positions.

Policy challenges and security concerns seen from the cancellation of NFT Paris in France

Policy environment tightening is also a significant challenge for the NFT industry. The NFT Paris event, a flagship industry gathering, was canceled just one month before its scheduled date. The reasons include France’s strict crypto asset policies and the frequent kidnapping incidents targeting crypto entrepreneurs and investors.

Siu comments, “France was once friendly toward crypto assets, but that stance has completely shifted. Even projects like Sorare, a fantasy football game, are now under the supervision of gambling regulators. Similar anti-crypto attitudes are seen across Europe.” He also reveals that security issues played a key role in the cancellation. France has experienced a series of kidnapping and abduction attempts over the past year, leading to the reality that “many people were trying to avoid Paris due to security concerns.”

Not the end, but a transition to a new phase: wealthy collectors underpin the market

In summary, the current state of the NFT market is better described as a transition toward maturity rather than an end. The transparency of blockchain data remains a fundamental appeal of the market. The core supporters are none other than wealthy digital art enthusiasts.

Just as Picasso and Rolex collectors feel a sense of community and belonging, NFT collectors also continue to participate based on their sense of community and long-term value retention. Although the market size has decreased, its quality and stability are steadily increasing. How the industry addresses security and regulatory challenges will be crucial for future growth.