While most of the cryptocurrency world focused on Bitcoin’s dramatic price swings in late December 2018, a small but passionate community of digital artists, collectors, and developers was quietly building the foundations of what would eventually become a multi-billion dollar NFT ecosystem. The Christmas week market rally that saw Ethereum surge nearly 17% on December 28 carried particular significance for this emerging movement — Ethereum was, after all, the blockchain on which non-fungible tokens were being born.
TL;DR
- Ethereum’s 16.9% rally to $135.50 on December 28 provided a bright spot amid the brutal 2018 bear market
- CryptoKitties, the breakthrough NFT project, celebrated its one-year anniversary during the Christmas week
- The ERC-721 token standard, published in January 2018, was laying the groundwork for all future NFT projects
- OpenSea, launched in December 2017, was operating in stealth mode with minimal trading volume
- Bear market developers continued building NFT infrastructure despite 80%+ declines in crypto valuations
CryptoKitties at One Year: The NFT Revolution Begins
December 2018 marked the one-year anniversary of CryptoKitties, the blockchain-based digital cat collectible game that had famously congested the Ethereum network in late 2017. Created by Canadian startup Axiom Zen (later Dapper Labs), CryptoKitties demonstrated for the first time that digital scarcity could create real market value. At its peak in December 2017, the most expensive CryptoKitty sold for approximately $110,000 worth of ETH.
By December 2018, the initial frenzy had subsided dramatically — as had the broader crypto market. But the project had proven something fundamental: that non-fungible tokens could capture public imagination and generate genuine economic activity. The game had introduced millions of people to the concept of unique digital ownership, even if most of the speculative interest had evaporated in the bear market.
The ERC-721 Standard: Building the Infrastructure
The technical backbone of the NFT ecosystem was formalized in early 2018 with the publication of the ERC-721 token standard. Proposed by William Entriken, Dieter Shirley, Jacob Evans, and Nastassia Sachs, ERC-721 established a common interface for creating non-fungible tokens on Ethereum. Before this standard, each NFT project had to implement its own smart contract logic, making interoperability between platforms nearly impossible.
By December 2018, developers were beginning to explore the possibilities opened by this standardization. While the number of active NFT projects remained small — CryptoKitties, CryptoPunks by Larva Labs, and a handful of experimental projects — the technical infrastructure was falling into place for the explosion that would come in 2020 and 2021.
OpenSea’s Quiet Launch
OpenSea, which would eventually become the dominant NFT marketplace, had launched in December 2017 — just as the crypto market was reaching its manic peak. Founded by Devin Finzer and Alex Atallah, the platform started as a marketplace for CryptoKitties and other early NFT projects. By late December 2018, OpenSea was operating with a tiny team and minimal trading volume, but the founders were convinced that digital collectibles represented a fundamental shift in how people would interact with digital assets.
The platform supported ERC-721 tokens and was slowly adding new projects as they launched. But in a market where Bitcoin had fallen from $20,000 to under $4,000 and the total crypto market cap had shrunk by over 80%, finding buyers for digital collectibles was an extraordinarily difficult proposition.
Ethereum’s Rally and Its Implications for NFTs
The December 28 market rally carried outsized significance for the NFT community. Since virtually all NFTs at the time were built on Ethereum, the health of the ETH ecosystem directly impacted the viability of NFT projects. When ETH surged 16.9% to $135.50 on December 28 — dramatically outperforming Bitcoin’s 8.88% gain — it signaled that the market still believed in Ethereum’s platform value, even during the depths of the bear market.
On Kraken, Ethereum’s trading volume reached $57.2 million on December 28, second only to Bitcoin’s $75.9 million. The total market volume across all Kraken markets reached $172 million that day. This liquidity was essential for the NFT ecosystem, as it ensured that collectors could convert between ETH and fiat currencies with reasonable spreads.
Bear Market Builders: The Real NFT Story
The most important NFT developments in December 2018 weren’t happening in price charts — they were happening in GitHub repositories and Discord channels. While speculators fled the market, developers and artists who believed in the long-term potential of digital ownership continued building. Decentraland, a virtual reality platform built on Ethereum where users could purchase and develop virtual land as NFTs, was preparing for its public launch. The project had already conducted a successful ICO in 2017, raising approximately $24 million.
Larva Labs’ CryptoPunks — often considered the original NFT project, having launched in June 2017 — continued to trade quietly among collectors. These 10,000 unique pixel-art characters, originally given away for free, would eventually become some of the most valuable NFTs in history. But in December 2018, they were largely overlooked, with most selling for just a few dollars worth of ETH.
The Broader Market Context
The December 28 rally occurred against a backdrop of extreme market stress. Bitcoin’s mining difficulty had just experienced its second-largest drop in history on December 3, falling 15.13% as unprofitable miners shut down their equipment. The network hash rate had declined roughly 39% from its August peak. In traditional markets, the S&P 500 was experiencing its own turbulence, with the U.S. government entering a partial shutdown on December 22 that would last into the new year.
For the NFT community, the broader market chaos was both a challenge and an opportunity. Lower ETH prices meant lower gas fees for minting and trading NFTs, making it cheaper to experiment with new projects. And the bear market filtered out short-term speculators, leaving behind a community of genuine believers who would build the infrastructure for the next cycle.
Why This Matters
December 28, 2018 represents a fascinating inflection point in NFT history. The market rally that day — led by Ethereum’s impressive 16.9% gain — provided a glimmer of hope in the darkest days of crypto winter. But more importantly, the bear market period of late 2018 was when the foundational infrastructure of the NFT ecosystem was being built. The ERC-721 standard was gaining adoption, OpenSea was laying the groundwork for what would become the world’s largest NFT marketplace, and a small community of pioneers was proving that digital scarcity had lasting value. Within two years, the NFT market would explode into the mainstream consciousness — but the seeds were planted in moments exactly like this, when prices were crashing and only the true believers remained.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency and NFT investments carry significant risk. Always conduct your own research before making investment decisions.
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