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    NFTs: Do They Still Prevail?

    Tanya Sharma
    Nov 24, 2022 07:50
    Even in a Bear Market, a Bored Ape Sells for Nearly $1 Million, and a golden-fur Ethereum NFT despite a downward trend in wider Bored Ape Yacht Club values.
    NFTs: Do They Still Prevail?
    Source: Unsplash

    Keung hails Thapliyal for the excellent $927,000 deal

    Deepak Thapliyal, CEO of Chain, who had earlier paid a record-breaking $23.7 million for a CryptoPunks NFT, sold a Bored Ape Yacht Club NFT for $927,000 in ETH and purchased by notable pseudonymous collector Keung.

    Keung tweeted today, "Thanks [Thapliyal] for the fantastic bargain."

    Thapliyal is a well-known NFT collector who broke the record for a CryptoPunks purchase earlier this year by paying 8,000 ETH, which was worth $23.7 million, for a single NFT.

    After FTX's collapse impacted Chain, he recently announced that he would sell his rare NFTs and keep the record-breaking Punk.

    These tweets were later removed.

    NFTs are "collectables": one of the riskiest investment class

    They can only fluctuate in value through outside factors. Their intrinsic worth does not change. As a result, their value can only increase if you persuade someone that the same object they paid X for is now worth X plus something else. Extrinsic value only typically follows a Ponzi scheme's return curve.

    In 2021, Non-Fungible Tokens, or NFTs, dominated the market, but NFTs have just suffered a shocking collapse.

    Source: Dune

    From the beginning of 2022 ($17 billion) to the end of September 2022 ($466 million), their trading volumes have fallen by 97%. The most well-known NFT marketplace is still OpenSea, with LooksRare trailing far behind.

     

    Source: Dune

    You can see the weekly trading volume in the graph above. OpenSea saw average weekly trading volumes of $80 million in September, with a daily trading volume of $11 million.

    NFTs were nothing short of a cultural phenomenon during the height of their excitement. For a rock jpeg, people were willing to spend millions of dollars. Celebrities paid millions to have their photos taken on the Bored Ape Yacht Club (BAYC) website.

    Even Visa invested $150,000 in CryptoPunk to diversify its holdings. Naturally, it wasn't all good. Many people made fun of NFTs, most notably South Park.

    This might be a bear market's consequences, right?

    During a global financial crisis, nobody wants to spend money on purchasing ape jpegs. Not at all.

    Remember that NFTs are not meant to be purely ornamental things. They are intended to be a responsible investment. However, the daily trading volume of $11 million could be better.

    In 2021, when it reached its peak trading volume, bitcoin had a daily trading volume of $45 billion. BTC now has a $15–$25 billion 24-hour trading volume.

    Yes, that is still an enormous amount, even though it is lower than what it was doing before.

    NFTs— Are they still in trend?

    Price inflation is far above what it should have been because of the market's tremendous overhype. The use cases, sadly, were only for "nice profile images."

    Of course, all types of con artists and rug-pullers were drawn to this overhype. For instance, the creators of "Evolved Apes NFTs" pulled a fast one on their community in September 2021 by stealing a stunning 798 ETH (about $2.7M).

    However, if there are more intriguing and valuable use cases in the future, we might witness a potential NFT resurrection.

    ENS (Ethereum Name Service) domains, essentially NFTs, are in higher demand. We might witness the second wave of NFT hype if a few more use cases are similar to these.

    A contributing factor to the NFT market fall is the inflation

    In response to the ongoing inflation crisis, the Federal Research increased federal funds at the end of September to a target range of 3% to 3.25%, its fifth increase this year.

    After the Fed's statement, bitcoin fell to below $19,000, its lowest level since June, as predicted in a Time article.

    In response to comparable announcements in March, May, and June, the price of bitcoin dropped by 10% or more. It decreased after the hike in July as well. They said it was milder.

    Markets for NFT products may suffer as the Federal Rate rises. There is yet to be a schedule for when inflation will finish. Thus it is unknown if and when the crash will too. The market is currently unstable.

    Closely examining the statistics

    NFT sales per day were well above 160,000 between October and December 2021 but fell to between 80,000 and 120,000 between this January and March, according to NFT market data tracking and analytics company NonFungible.

    Source: OpenSea

    You can see the weekly trading volume in the graph above. OpenSea saw average weekly trading volumes of $80 million in September, with a daily trading volume of $11 million.

    NFTs were nothing short of a cultural phenomenon during the height of their excitement. For a rock jpeg, people were willing to spend millions of dollars. Celebrities paid millions to have their photos taken on the Bored Ape Yacht Club (BAYC) website.

    Even Visa invested $150,000 in CryptoPunk to diversify its holdings. Naturally, it wasn't all good. Many people made fun of NFTs, most notably South Park.