NFT Minting Behavior: What does the data teach us about the market?

NFT Minting Behavior: What does the data teach us about the market?

NFT Minters’ behavior could be taken as a signal for the short-term market trend. Leveraging data derived from the Nansen dashboard, we explore the trends relating to NFT minting.

Summary: 

Previous insights shared by Chainalysis observed that one in five NFT Minters realized profits from the NFTs purchased during the minting phase. While their report established the advantage that NFT Minters have, it led us to dig deeper into the behaviors of NFT Minters. Leveraging data derived from the Nansen dashboard, we explore the trends relating to NFT minting. Our analysis revealed that NFT Minters’ behavior could be taken as a signal for the short-term market trend, just as how we observe miners' behavior as a proxy for Bitcoin’s price. Data from Nansen’s NFT indexes and Market Trends dashboards captured the recent downward trend in the market, and such a trend was reflected in NFT Minter’s behavior. Our findings shed light on the phenomenon that one in three minted NFTs have a higher trading floor price than their initial minting costs. Equally, one in three NFTs ends up as a dead collection with little or no trade activity post-minting. 

Understanding the NFT market through NFT Minters’ behavior

NFT market trend in the last 30 days according to the Nansen NFT-500 (ETH) index (20 Feb to 21 Mar 2022).


NFT market trend according to volume of Mint Sales (January 2021 to February 2022)

In the last 30 days, we saw a slight correction in the NFT market where the Nansen NFT-500 (ETH) index fell by - 5.23% when denominated in ETH and -0.89% when denominated in USD. Such a movement aligns with the broad market movement, with sentiment mainly being ‘risk-off’ due to the market anticipating a hike in the interest rate and the war between Russia and Ukraine. Such a sentiment was also reflected in the volume of the Mint Sales, with the volume declining in the last 30 days. While the Nansen NFT-500 index reflects this market sentiment, we were also able to observe such a trend through the behaviors of NFT Minters. 

Spending on minting and gas fees by NFT Minters

Since the start of 2022, the amount of ETH spent on minting has gradually declined. When checking this trend against google trends, search on the topic of NFTs experienced a decline, suggesting that interest in the topic of NFT may be slowed in the short term. 

Google trend on the topic of NFTs

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However, we noted that NFT Minters have spent more ETH on both minting and gas fees in 2022 when compared to the previous year (2021). During this period, some of the notable NFT mints included MAYC, Pixelmon, Meebit and Lost Poets:

NFT Collections NFT Mint date Amount spent on NFT mint (ETH)
Mutant Ape Yacht Club 2021-08-29 28151.12
Pixelmon (Gen 1) 2022-02-07 22839.4
Meebits 2021-05-03 22070.66
Lost Poets 2021-09-03 16607.36
Average NFT mint cost over time

A closer look into the data showed that the average minting cost peaked in May 2021 at 0.56 ETH, but dropped to a low of 0.06 ETH in June 2021. Since July 2021, the average NFT mint cost ranged between 0.07 ETH to 0.1ETH. We hypothesize that a possible explanation for this phenomenon is that NFT minting is increasingly competitive with more projects being introduced to the market, thereby pushing the average mint cost down. Between January 2021 to February 2022, we saw the number of minted collections increased by over 4800%, from 39,802 collections  to 1,970,886.

Spending on NFT minting and the number of unique collections minted
Unique NFT Minters and collection over time

The aggregate increase in total spending for NFT minting and gas fees is most likely due to the increase in unique NFT Minters participating in the market over time. 

Cumulative NFT Minters over time

Between 2021 to 2022, we observe a 2,000 times growth in the cumulative NFT Minters in the NFT market, from approximately 500 NFT Minters at the start of 2021, to 1.2 million NFT minters at the end of February 2022. 

Profiles of NFT Minters 

Number of NFT Minters by the amount spent on minting
Volume of ETH spent on NFT Minting organized by NFT Minter’s spending

As a snapshot, we can see that most NFT Minters spent up to 0.5 ETH for their mints. These Minters who spent up to 0.5 ETH on minting represent about 10.7% of the NFT Minting volume.  

The NFT Minters that dominate the minting volume are those who spend between 10 to 100 ETH, and they represent about one-third (32.6%) of the total minting volume. 

Cumulative spending on mint by NFT Minter’s profile

When analyzing the profiles of NFT Minters every month, we observe that before 2022, it was the group of NFT Minters who spent between 10 to 100 ETH that were the largest group of NFT Minters. However, since December 2021, this trend has flipped, with NFT Minters who have spent 1 to 5 ETH being the most representative. On the other hand, there appears to be a slight decrease in ‘whale’ NFT Minters who have spent over 100 ETH. 

Minting does not guarantee profits.

The ‘dark side’ of minting - most minted NFTs are never sold

We were curious about what proportion of minted NFTs are re-circulated and transacted on the secondary market. Our data shows that from January 2021 to February 2022, an average of 44.8% of the minted NFTs are re-sold on the secondary market every month. 

However,  it appears that the proportion of minted NFTs that are sold on the secondary market have been gradually declining since July 2021.

Proportion of minted collections that are sold on secondary market
Minted NFTs that are in profit, underwater or dead collections

When analyzing the profitability of minted NFTs, it shows that, on average, one in three NFTs minted go on to become a dead collection with little or no trade activity. On average, one in three NFTs also have a trading floor price below the mint costs, and one in three NFTs have a trading floor price that is higher than the mint costs. However, when analyzing this trend over time, we see that the proportion of minted NFTs that are in profit are increasing over time, while the proportion of NFTs that are dead collections are gradually decreasing. 

When it goes well, how well does it go? (The top minted collections profit per month)

When analyzing the top minted collections’ profit per month, we see that the minimum average profit was approximately 4 ETH, with the peak being 115 ETH. As illustrated in the above graph, the profits of top minted collections follow a volatile trajectory. 

Bottom line: So should I mint?

Getting into NFTs early through participating in mints should come with careful consideration. One should consider their risk appetite when deciding whether to participate in NFT mints. It is essential to conduct thorough due diligence on prospective projects such as researching the community, their roadmaps and the founding team’s history. For a more evidence-based approach, one can leverage the insights on Nansen’s NFT God Mode to check transaction data of specific projects. One can also utilize Mint Master to gather insights on what notable NFT minters are doing, and to track Smart Money’s interaction with a project on Smart Money. Although NFT minting might appear like a micro-level activity, it is crucial to understand the macro outlook of the NFT market. You can benefit from the Nansen Market Trends dashboard; because understanding the broader macro trends can influence one’s prospects of minting NFTs. 


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Disclaimer

The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.

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