This post was co-authored by Marc Lindsey, President and Janine Goodman, Vice President of Avenue4.

In 2021, the story was price. In 2022, the story was price and large block supply. The story in 2023 is decline—but with a notable caveat.

Spurred by unprecedented unit pricing, the North American IPv4 market in 2022 experienced its second-best year in terms of overall traded volume, and in both 2022 and in 2023, large block market activity was as robust as ever, with sellers trading large blocks at over $50 per number. The rest of the market, however, saw decreases in activity and pricing in mid-2022 which has continued into the new year.

Although the annual transaction volume decreased only slightly between 2022 and 2023, it has dipped by 21% since 2021. During that time, the volume of numbers traded also shrank by 22%. Meanwhile, the average per-IP price for blocks smaller than /16 has plummeted by 30% from its mid-2022 peak. Unit prices now hover closer to 2021 levels.

Here’s our caveat: These downward trends expose two alternative market forecast factors. The IPv4 market is either at the beginning of a long-term decline cycle or experiencing a short-term correction. Avenue4 believes the data points to correction territory.

Without an obvious supply-demand basis, small block unit pricing nearly doubled between mid-2021 and mid-2022. Pricing for mid-sized and large blocks also surged over this same period with moderate response lag. Yet, the number of transactions, trading volume, seller participation, and routing announcement growth since 2015 do not reveal any readily observable market factors that explain this unprecedented price escalation. See Tables 1 and 2 below. Moreover, the trendline in Table 1 underscores that pricing is more or less where one would expect it to be in 2023 were it not for the 2021-2022 bubble.

Other notable takeaways from the 2023 North American market include:

• The mid-block market trading volume—consisting mostly of /16 blocks—held steady when compared with 2022.
• Notwithstanding the overall market cooling and /8 holders playing less of a dominant role in the market (see Table 3), large block supply diversification was healthier than usual. 2023 saw the highest number of large block sellers and transactions in the market’s history.
• InterRIR transactions, which averaged less than 13% of total traded volume since 2015, jumped to 25% in 2022 and continued to climb in 2023, accounting for nearly 1/3 of the numbers traded in the ARIN region. See Table 4.

Heading into 2024, Avenue4 does not anticipate a precipitous decrease in IPv4 market activity in the near term. More than eight years post-free pool exhaustion, the market demand for IPv4 space remains strong. Neither buyers nor sellers appear under pressure to adopt IPv6.

Whether pricing will resume its steady upward trajectory is unclear, however. Last year we predicted that the rapid price increases would result in some pullback by buyers. This is precisely what we saw in the second half of 2023. As more and more buyers meet their forecasted needs over the next couple of years, we expect there will be increased demand-side resistance to any significant future price spikes.

The attached infographic presents the essential information for IPv4 market participants. We hope you will find it useful in evaluating the challenges and opportunities in the coming year.