JPMorgan Identifies Early Signs of Revival in DeFi and NFT

Activity in the DeFi and NFT sectors shows ‘preliminary’ signs of recovery, as the prospect for approval of a spot Bitcoin-ETF improved sentiment in the crypto markets. JPMorgan analysts, according to CoinDesk.

Growth in these sectors has followed two years of decline, creating a degree of optimism that the worst may be behind us in the medium term.

“While we do not doubt that the recent revival of DeFi and NFT activity is a positive sign, we believe it is still too early to celebrate,” the experts said.

According to them, the main driver of growth in the DeFi segment lies in increased trading activity on decentralised exchanges. A significant influence also came from liquid staking Lido Finance.

As for NFT, they benefited from the popularity of Ordinals and other protocol analogues. Their own “inscriptions” have already been rolled out by Avalanche, Fantom and Polygon.

According to DappRadar, the leading NFT marketplaces over the past week posted positive momentum.

Top collections have also recorded a significant spike in trading volumes.

JPMorgan emphasised that the Ethereum blockchain would benefit less from the growth, as liquidity flows into younger projects such as Aptos, Sui, Pulsechain, Tenet, Sei and Celestia. The problem is also linked to its “scalability, slow transaction speeds and higher fees”.

Earlier, the firm’s analysts described the crypto rally as ‘overextended’ and suggested that it could slow after the approval of a Bitcoin-ETF.

In November, CoinGecko reported, that since the appearance of GameFi, approximately 2,127 of 2,817 (75.5%) projects in this direction had failed.