The NFT market has been stealing the limelight with a spectacular increase of 23% in the market capitalization of recent 24 hours, bringing its value up to $6.4 billion. This phenomenal growth, combined with a 317percent increase in volume traded to $40 million, is causing the crypto community abuzz with enthusiasm and discussion. Is this the beginning of a fully-fledged NFT surge or is it just another speculation bubble that is about to explode? Let’s look at the factors that are driving this market and discuss what’s to come for digital collectibles.

Blue-Chips and Bitcoin Ordinals Lead the Charge

This rally is driven by major players within the NFT market. The Ethereum-based collection like Moonbirds that saw their floor price rise 31% up to 1.84 Ethereum as well as CryptoPunks with a 14% increase to 46.7 Ethereum, are at the front. Others, like Bored Ape Yacht Club (BAYC) as well as Azuki have seen solid increases, and floor prices rising gradually.

 Daily trading volumes for Ordinals have increased by more than 400%, indicating the growing demand for Bitcoin’s inscribed-based NFTs. The momentum across the chain, as well as the increasing interest in Solana as well as Polygon which shows that how the NFT market is expanding, shifting away from its Ethereum-dominated base. According to one X user said, “Ordinals are the dark horse nobody saw coming–Bitcoin’s NFT game is heating up.”

Many factors have come together to cause this rally.

Crypto market momentum The rise of Bitcoin to $120,000, and Ethereum’s 50% increase since the beginning of July provide a bullish background for NFTs. Whales are funneling cryptocurrency profits to high-value NFTs. There is large wallet transactions on platforms such as OpenSea or Blur.

Brands such as Nike and Starbucks have incorporated NFTs into loyalty programmes, and Pudgy Penguins is expanding into games and physical products. The practical applications draw in traditional and crypto natives.

Macroeconomic The tailwinds: Lower inflation rates and the expectation of more loose global monetary policy are encouraging risks-averse investments. Capital is being poured into speculation assets like NFTs with the hope of riding the next tsunami.

Social Hype The mood on X is intense in the form of collectors and influencers hyped up about major collections as well as upcoming release. Blogs on whale-related purchases as well as advertising campaigns fuel FOMO which is driving participation in retail.

But, certain indicators, such as slowing RSI (Relative Strength Index) as well as MACD (Moving Average Convergence Divergence) indicate that the market could be in an overbought level, suggesting an imminent pullback in the near-term.

Bull Run or Speculative Bubble?

The optimistic point to past trends and note that the month of January is often an optimum time for NFT activities. Leading industry figures like Yat Siu from Animoca Brands are bullish, forecasting that the emergence of new blockchain platforms like Berachain and Monad and token airdrops from projects such as OpenSea and OpenSea, will propel markets to record highs by 2025. Growing use of NFTs for gaming, art and loyalty programs for brands also strengthens the arguments for sustained growth.

However, skeptical people urge to be cautious. The regulatory hurdles, like the SEC’s recent investigation into OpenSea and OpenSea, may dampen the enthusiasm in the event that enforcement becomes more stringent. There is also the issue of excess supply with new collection offerings flooding the market, possibly reducing the value. One X customer warned, “Pumping floor prices is great until the rug gets pulled–stay sharp.”

What’s Next for NFTs?

The NFT market’s growth of 23% is an obvious signal of renewed enthusiasm, however, sustainability is contingent on a variety of aspects. The continued whale activity, the high volume of trading, as well as innovative ways of using the technology will be essential in sustaining growth. Investors need to keep a watchful alert for any catalysts that may be coming up, like new blockchain launch and significant brand partnerships and be aware of market and regulatory risks.

At the moment, the mood is electric with news sites on X buzzing about “NFT season” and collectors taking advantage of assets in Ethereum, Bitcoin, and the rest of. If you’re an experienced trader or are a newbie to the market the recommendation remains the same: perform your own investigation (#DYOR) and diversify your portfolio keep an eye on markets’ developments. The NFT market is rapidly changing and the current rally could become the beginning of something huge, or perhaps a call to be cautious.