US regulators are cracking down on cryptocurrency exchanges following the collapse of FTX. However, the crypto markets appear to be unfazed and are continuing their upward trend. Ethereum prices consolidated around $1,650 over the weekend, rising above pre-FTX-collapse levels.
This week’s edition looks at the renewed interest in the non-fungible token (NFT) space, driven by the latest developments surrounding the upcoming NFT marketplace and aggregator, Blur, which is challenging industry leader OpenSea. The article analyzes the effects of the Blur airdrop on OpenSea’s market dominance, assesses the sustainability of Blur’s user acquisition, and evaluates to what degree the renewed interest in NFTs is fostering Ethereum’s network activity.
US regulators take aim at centralized exchanges
After the FTX collapse, US regulators stepped up their scrutiny of cryptocurrency exchanges. On February 8, Kraken reached a settlement with the SEC over its staking-as-a-service product, which led the exchange to immediately suspend staking services for US citizens.
Stablecoin issuer Paxos declared it would halt the minting of BUSD on February 21, citing regulatory pressure from the New York State Department of Financial Services. Since February 8, BUSD has declined by more than 31.2%, seeing over $5.052B in redemptions.
Gas prices are on the rise again
Median transaction gas prices have been consistently low over the past nine months, ranging between 10 to 20 Gwei. This translates to an average of $0.50 for a standard transaction and around $2.00 for a smart contract interaction, a fraction of the triple-digit numbers seen during the previous bull cycle.
Since the beginning of this year, however, gas costs have gradually increased, currently sitting at 38 Gwei, exceeding the gas cost spikes seen during the bear market around events such as the FTX collapse and the Binance bank run. The incremental nature of the gas demand suggests an early resurgence of network activity may be underway.
Interest in NFTs reawakens
The NFT market is once again showing signs of growth, with total gas consumption by NFT transactions rising by 97% for two consecutive months. This suggests that activity around NFTs is approaching levels seen during the NFT Boom.
The rise in interest in NFTs is initially attributed to the launch of new collections by some of the industry’s largest players such as Yuga Labs, Doodles, and Moonbirds. However, closer inspection shows that gas demand during the past two weeks has been mainly driven by the developments surrounding the Blur Airdrop.
Blur comes after OpenSea
Blur, an NFT marketplace, and aggregator launched in October 2022, quickly gained traction and has since been nipping at the heels of industry leader OpenSea. As of today, Blur has seized a 78% market share of the NFT transfer volume, having overtaken OpenSea following its airdrop on February 14. Blur aims to be a professional trading platform for NFTs, featuring a zero trading fee model and optional royalty payments.
While the token has lost roughly 13% in value over the past week, the airdrop brought new attention to the upstart rival. As a result, Blur’s market share jumped by 34%, reducing OpenSea’s share from 36% to 15%. In an attempt to counter its upstart rival, OpenSea made a bold move in restructuring its fee model and policies, however, was still unable to retain its market share.
Despite US regulators cracking down on centralized exchanges, the crypto markets remain resilient. Ethereum prices have consolidated around $1,650, and gas prices have gradually increased, suggesting an early resurgence of the network.