Over the last two weeks, cryptocurrency prices have fallen dramatically, but some sectors of the economic framework have indeed been hurt worse than others. Stablecoins, in particular, appear to be extremely volatile.
Are NFT platforms soon to follow? After-sales volume and NFT prices fell dramatically on aggregate since its high last year, some people are wondering. Should the NFT market collapse, the ramifications might be massive. Last year, many new purchasers entered the cryptocurrency sector through NFTs, which insiders marketed as a fun way to try out blockchain investments. It may take a very long time to get them back into the mainstream if they have been burned by a major decrease.
The NFT market is now very different. One of the largest cryptocurrency headlines last year was the NFT explosion. One of 2022’s cautionary tales could be the backlash.
Because of its initial picture as the leading NFT marketplace, OpenSea was valued at $13.3 billion in January. A CryptoPunk was purchased by Visa. On the Tonight Show, Jimmy Fallon, as well as Paris Hilton, discussed their Bored Apes. Coinbase, Crypto.com, and FTX decided to follow suit and launch NFT marketplaces of their own.
Corporate NFT statements now seem to be very rare. According to CryptoSlam data, weekly NFT trading activity has dropped from $1.07 billion in August 2021 to $23.6 million in May.
It’s not all downhill and rightward. According to DappRadar, the amount of OpenSea transactions has increased by around eight percent in the last month. Rarible’s trading volume has also increased by roughly 18%. However, nothing compares to the NFT hysteria of last August.
Morgan Stanley believes the NFT might tumble. According to a new analysis, Bitcoin’s decline cannot be attributed solely to falling technology stocks, and other aspects of the crypto industry are also being challenged.
Cryptocurrency is being treated like any other hazardous, speculative asset by the market.
Because NFTs are the second most risky and leveraged industry, according to Morgan Stanley, they should drop after the UST route.
According to the research, NFTs are largely owned by businesses that seek to flip assets for a higher cost, not by holders. The price of several of the more well-known NFTs has dropped considerably.
Furthermore, the purchaser of an NFT of Jack Dorsey’s inaugural tweet, who spent $2.9 million for it, is reportedly having difficulty selling it, with the highest bid presently hovering around $21,000. Prices at the Bored Ape Yacht Club have also recently dropped.
Last year, NFTs moved from the internet’s edges to the front page of The New York Times.
This attracted a large number of nonconformists.
Initiatives varying from the digital Discord forum BFF to Visa’s comprehensive program for teaching artists about NFTs now serve as examples of how the cryptocurrency economy’s boom was exploited to attract new players.
Once the dot-com bubble popped, private technology funding took up to 10 years to recoup because funders were frightened off by the uncertainty. Tech equities were also avoided by retail investors. A drop in NFT values could deter customers in the long run.
That’s still a big if because the NFT marketplace hasn’t vanished like Luna.
The fact that NFTs aren’t fungible tends to help. Projects centered on well-executed imagery, a flourishing online community, an entertaining game, or an existing fanbase, such as sports, may be able to weather the storm. Volatility has been the standard for NFTs from its inception, according to Eddy Lazzarin, director of Protocol Design and Engineering at 16z Crypto. Nevertheless, as he pointed out, even that may alter. Perhaps a restructuring would provide stability.
The Bottom Line
The NFT craze seems to have had a drastic decline, with analytics showing a massive decrease in searches for the topic online. This brings about a lot of instability in the marketplace.
Following the cryptocurrency market’s collapse, it brings about massive fear for investors entering the NFT space as this market bases itself on cryptocurrency as its foundation. It should be interesting to see if the marketplace can recover now that it has lost much of the initial trend-based interest that allowed it to explode initially.
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