Daily Management Review

The NFT Bubble Is Apparently Experiencing The Shrinking Feeling


The NFT Bubble Is Apparently Experiencing The Shrinking Feeling
This strange and chaotic market is showing symptoms of slowing down a year after a single non-fungible token sold for $69.3 million in crypto at Christie's auction house, with the buyer paying to be recorded on blockchain as the owner of a digital file that anybody can access online for free.
Sales on OpenSea, the largest NFT marketplace, topped $5 billion in January, up from $8 million the previous month, but dropped to roughly $2.5 billion last month.
According to market tracker CryptoSlam, roughly 635,000 people bought an NFT last month, on average for $427, down from about 948,000 for $659 in January.
Despite this, businesses continue to flock to the trendy "metaverse," where digital assets such as virtual land and avatar apparel may be purchased for cryptocurrency in the form of NFTs. Businesses such as JPMorgan and HSBC have created virtual venues in NFT-based worlds this year, while YouTube and Instagram have NFT plans as well.
"Obviously the enthusiasm and interest that we had at some periods last year is not here anymore," said Pablo Rodriguez-Fraile, a Miami-based digital art collector. "I think we achieved something that wasn’t sustainable."
However, in recent weeks, he said, sales have picked up again.
The market was not in general decline, but rather stabilising after its meteoric growth, according to Modesta Masoit, director of finance and analytics at NFT research firm DappRadar, who added that investor caution following Russia's invasion of Ukraine in late February may have reduced sales.
"Everybody was expecting that there was going to be a consolidation period," she added. "It's not going away, it's just consolidating."
According to DappRadar, overall NFT sales in 2022 have totaled around $11.8 billion, excluding $19.3 billion in sales on a platform suspected of being dominated by irregular trades, where a small number of accounts move things back and forth for inflated costs. find out more
NFTs are rare and hazardous creatures.
In a highly volatile market where the worth of an asset is determined by its social status, prices might collapse rapidly after an initial boom.
In contrast to the traditional art industry, the NFT market can seesaw between bull and bear cycles in as little as a week, according to Nima Sagharchi, head of digital assets at auction house Bonhams.
An NFT representing a piece of computer-generated abstract images from a collection called Art Blocks would sell for around $15,000 on average at a peak in September 2021, but fetched just under $4,200 last month, according to CryptoSlam.
Meanwhile, NFTs from the Bored Ape Yacht Club - a set of 10,000 variations on a cartoon ape - continue to sell for roughly $300,000 on average.
Purchasing a Bored Ape, as done by celebrities such as Madonna and Paris Hilton, is analogous to joining a hybrid of a members' club and an investment plan. Buyers frequently promote their membership on social media by using their NFT as their profile photo.
ApeCoin, a cryptocurrency, was introduced last month and was initially distributed to holders of Bored Ape NFTs as well as the project's founders. According to Coinbase data, it has a market cap of $3.4 billion.
Expectations for this token prompted Raoul Pal, a former Goldman Sachs executive, to spend about $400,000 of the cryptocurrency ether on a Bored Ape NFT, according to a blog post.
"Social tokens are the BIG thing," he wrote.