NFT as Digital Artwork: Why the Market Continues to Grow Amid Market Downturn

While the monthly transaction volume of non-fungible tokens has decreased from over one billion dollars in 2021-2022, the sector has not been completely defeated. According to Yat Siu, co-founder of Animoca Brands, major art lovers and digital art enthusiasts continue to lead in maintaining the NFT market. The current monthly volume, reaching nearly three hundred million dollars, shows that the ecosystem is still alive, especially among affluent collectors who see NFTs as a new way of art collection.

NFTs and Traditional Art: The Same Logic of Collecting

In an interview at the cryptography conference in St. Moritz, Siu explained how NFT collecting follows the same pattern as traditional art collection. Wealthy individuals, such as Picasso collectors or enthusiasts of rare sports cars and high-end watches, have a natural desire to be part of an exclusive community. “It’s not just about asset value,” Siu explained. “It’s a matter of lifestyle and shared passion. When you are a collector of a particular artwork or designer, you are already part of a group of like-minded people.”

The digital version of this phenomenon is happening now in the NFT space. Collectors of Otherdeed—digital assets reflecting virtual land ownership in Otherside, the blockchain-based world of Yuga Labs—regularly interact with other Otherdeed enthusiasts. The same dynamic is observable in the Bored Apes community and other major NFT collections. Billionaire Adam Weitsman, for example, actively purchases this type of digital assets because of their artistic and cultural significance.

The Market Is Down but Not Disappearing

Siu’s own NFT portfolio has decreased by approximately 80% from its peak valuation. But this is not simply a loss—it is part of the natural market cycle. “These are long-term assets not intended for flipping,” he explained. This distinction is important: collectors serious about art and digital art see their holdings as permanent acquisitions, not short-term trading positions.

Data supports this. In 2017, the first NFTs appeared on the Ethereum blockchain as digital collectibles. Like other crypto trends, the sector has gone through waves of interest and development, from the CryptoKitties boom to more sophisticated implementations today. The 2021-2022 period saw the peak of speculative mania, but the current market level is more stable and driven by genuine collectors and builders rather than day traders.

The Geopolitical Factor: France and the Anti-Crypto Stance

The cancellation of the NFT Paris event signaled a larger problem that is not directly about NFT technology itself. “It is a statement against France, not against NFTs or the conference organizers,” Siu said. The European nation has significantly shifted away from crypto-friendly policies, with regulators scrutinizing projects like Sorare (a blockchain-powered fantasy soccer game) for gambling compliance.

Security concerns have also become a critical factor. Last year, France experienced multiple kidnapping and extortion attempts targeting crypto executives and investors. The combination of regulatory hostility and personal safety risks discouraged many key players from attending, including Siu himself.

This contrasts with other regions that are more open to innovation. The Middle East and Southeast Asia have become vibrant hubs for NFT development and Web3 projects, offering a more supportive regulatory environment.

The New Generation of NFT Projects: Pudgy Penguins and Platform Play

The ecosystem is evolving with new strategic approaches. Pudgy Penguins is a prominent example of modern NFT branding strategy. It is not just digital collectibles—it’s evolved into a comprehensive consumer IP platform. The project acquires users through mainstream channels first (physical toys and retail partnerships), then introduces Web3 elements (games, NFTs, and PENGU tokens).

The results are impressive: the Pudgy ecosystem has over $13 million in retail sales and has sold over 1 million units. Their gaming title, Pudgy Party, achieved 500,000 downloads in just two weeks. The PENGU token is widely distributed via airdrops to over 6 million wallets. This integrated approach is what propels modern NFT projects toward sustainable growth.

The Infrastructure Behind NFT Innovation: Digital Assets and Stablecoins

The ecosystem is also supported by growing infrastructure. In the UAE, the stablecoin USDU has launched with 1:1 backing from reserves held in secured onshore accounts. Partnerships with Emirates NBD and Mashreq provide banking-grade security and compliance.

Global distribution infrastructure has also become more sophisticated. Aquanow, a digital asset infrastructure company, has become a global distribution partner helping institutional access to USDU and other digital assets beyond traditional boundaries. This development signals the maturation of the NFT and Web3 space from pure speculation to institutional-grade infrastructure.

The Future: Art and Digital Ownership

The NFT market is not disappearing because the underlying value proposition will remain relevant. The ability to own and trade digital art with verifiable scarcity and provenance is revolutionary. While speculative mania has subsided, serious collectors of digital art and virtual assets remain committed. Yat Siu’s message is clear: NFTs are not a speculative bubble that has burst. They are a new medium for artistic expression and collection, and wealthy enthusiasts continue to explore and build in this space.