Daily Management Review

Why Are NFTs No More In The News?


Why Are NFTs No More In The News?
Any method devised by Homer Simpson to become wealthy quickly almost always backfires.
The poor father in the most recent episode of The Simpsons turns himself and his son Bart into NFTs in an attempt to gain millions of dollars.
When Homer learns that "the NFT craze is over" via a floating pizza cat, everything goes wrong.
Both NFT supporters and detractors have praised the episode for its ability to parody a segment of the cryptocurrency industry that peaked a few years ago but has since quieted down.
Is the flying pizza cat correct, and do NFTs actually no longer exist?
According to a thorough investigation, the once-crazy Non Fungible Token market has lately dropped to its lowest point, with October being dubbed "Floptober".
Still, others believe there is hope.
NFTs are digital ownership tokens that are typically purchased with cryptocurrencies.
Although they are frequently connected to pictures or movies, having an NFT typically does not grant the buyer the image's copyright. Although anybody can read, copy, and save it online, only the buyer is recognised as the token's legitimate owner. Proof is engraved into the blockchain's immutable record, which is a massive online spreadsheet of transactions.
Dapp Radar experts claim that the value of NFT transactions has just dropped to its lowest level since the market's peak.
The total quantity of money sold in the sector, or trading volume, has decreased by 89% since the start of 2022.
It was $12.6 billion in the first quarter of 2022, and as of the third quarter of 2023, it is only $1.39 billion.
Additionally, the sector is shrinking. The makers of the lucky Bored Ape NFTs, Yuga Labs, revealed an undisclosed number of layoffs last month.
Among its most well-known series is Bored Ape Yacht Club. Millions of dollars were once paid for NFTs, which were driven by wealthy customers such as talk show presenter Jimmy Fallon and media sensation Paris Hilton.
Although Paris Hilton tweeted about her collections nearly every day in January and February 2022, she hasn't blogged about NFTs on X, formerly Twitter, since October 2022.
The value of the cheapest NFT in the collection, Bored Ape NFTs, peaked in the beginning of May 2022 and cost approximately $268,000 (144 Ethereum tokens), according to the NFT Price Floor website. It is now only $56,000.
Due to increasingly poor bids, US collector and artist Taylor Whitley was compelled to sell six of his seven highly valued Bored Ape NFTs.
"I haven't really wanted to sell, but the market is really bad, so it's the smart thing for me to do. I think the NFT market could even go lower," he tells the BBC.
Taylor rejected many better offers for his most prized Bored Ape in the past, but last month he sold it for $212,000 dollars.
If he had sold at the peak, he could have received at least ten times more for his NFTs. Even though it hurt, he was an early investment and still made huge gains. He made 1,000 times more money on his most recent transaction than on his original $200 investment.
The industry is made up of millions of smaller brands and artists for every Bored Ape NFT.
Angie Taylor, a Scottish artist, used to receive up to $8,000 every NFT piece, but these days she only makes about $600.
She was forced to return to her part-time tutoring work before to NFT.
"I'm still selling bits and pieces here and there, but I am having to do a day job as well. I can't make a living off this anymore with nothing else," she says.
However, she always believed that the bubble will pop.
"I kind of budgeted for this to happen, because I thought, this is a boom and bust type of situation," she says.
It's obvious that buyers are in control of the market, and many contented purchasers are taking advantage of the slump.
Recently, Adam, also known online as Little Fish, won $663,000 for his crypto punk artwork NFT.
Although the European full-time cryptocurrency investor recognises that the sum is substantial, he believes he received a good deal on his CryptoPunk #36009.
After all, its seller turned down a $1.18 million offer a year ago.
"The downturn is exactly why I bought it. People are desperate. In the winter time you can buy summer clothes for cheap," he says.
Adam thinks that NFTs will experience summer once more, and he plans to "enjoy it" when it happens.
His comparison of seasonal variations to the current cryptocurrency market situation is accurate.
In 2022, there were multiple crashes that caused the value of digital currencies, like as Bitcoin and Ethereum (ETH), to plunge and then stabilise. These crashes are referred to as a crypto winter by many.
Though there have been some recent indications of a thawing, with Bitcoin reaching $34,000 per coin, the growth has slowed and is still far from reaching the $70,000 mark in late 2022.
Despite being a distinct product, NFTs are constructed using the same blockchain technology as cryptocurrencies, and many of the largest NFT purchasers have wealth levels that closely align with those of cryptocurrencies.
They have more money to spend on NFTs when cryptocurrency values rise.
MetaKovan, also known as Vignesh Sundaresan, is the largest NFT investor in history.
His historic $69 million acquisition of an NFT from American artist Beeple was one of the main drivers of the market's March 2021 surge.
"It's still a long way to go before we can look back and see whether, you know, it was a good purchase or not," says Mr Sundaresan. "It was definitely a lot of money, but it wasn't a significant amount of my wealth."
Though he feels the bubble is finished, Sundaresan still thinks NFTs have a bright future as art treasures.
"Everything in crypto happens very fast, and I think the next phase of NFTs won't be about the price. People who are speculating are taking a huge risk because it's not even like the supply is finite," he says.
Vignesh is scathing of the sector that profited from the speculative boom and duped a lot of people out of their money.
"I've not seen any good sustainable businesses around NFTs," he states.
Pudgy Penguins, an NFT company that just began selling plush toys based on its NFT characters, seems to be defying the trend, nevertheless.
Royalties are paid to the associated Pudgy Penguin NFT holder for each toy sold.
It seems that allowing NFT owners to profit from their intellectual property is a trend that could spark interest in the products again. According to the NFT Floor Price webpage, Pudgy Penguins has kept its floor price close to its peak in January 2023.
Additional methods that customers are being given further incentives include real NFTs, artist royalties being waived, and invitation-only event membership.
Pranksy, a British NFT entrepreneur, believes that innovation is essential to a market comeback.
"I predict a small number of innovative individuals and brands will be able to spearhead mainstream adoption," he says.
He believes that the market will rise again, but he concedes that the past levels of "pandemonium" are unlikely to be reached.