Once hot NFTs are suddenly not
Non-functional tokens was in a rage last year as artists, athletes, celebrities and big retailers used the new technology to buy digital versions of their goods. But recent data suggests that buzz around NFTs is starting to fade.
NFT sales fell 47% globally during the first three months of 2022 compared to the previous quarter, according to NonFungible, which tracks the NFT sector.
“The general public seems to be losing interest in NFTs if Google’s search volume is to be believed,” the group said in a report.
An NFT provides some proof of ownership of a digital object, or access to services, using a unique code on the blockchain associated with an image or video. Because they are unique, NFTs can be transferred or sold, but not copied or broken down into smaller parts. Some buy an NFT in the hope that the value will rise, while others buy them just to brag or to participate in a new technology trend.
In March, customers spent $ 7.8 billion this year buying or selling NFTs, according to NonFungible. Researchers said that it shows that the NFT market is not collapsing as much as settling after the meteoric rise in 2021.
“Volumes are down, but prices are up,” the report concluded. “In other words, the NFTs that remain in circulation are recognized as truly valuable.”
The last one cryptocurrency crash is a major reason behind the cooling interest in NFTs, said blockchain expert Merav Ozair, who teaches financial technology at Rutgers University. This is because buyers often use bitcoin, ethereum or other digital currencies to buy NFTs, and falling cryptocurrencies reduce their purchasing power.
The price of Bitcoin, which peaked in November last year at around 68,000 dollars, is down 56% since the beginning of the year. The prices of solana, ripples and ether have also fallen as investors move out of highly volatile cryptocurrencies into more stable assets.
A shower of thefts and fraud Large NFT marketplaces can also dampen enthusiasm for NFTs, according to some experts.
In the midst of the growing hopela last year, some NFTs sold for millions of dollars, making national headlines with every transaction. Technical enthusiasts watched as a collection of NFTs from the Bored Ape Yacht Club with flashy cartoons of monkey images sold for top dollar. The entry bid for a Bored Ape NFT was 52 ether in January 2022, equivalent to $ 210,000 at the time, according to CNET. Buyers included celebrities such as Jimmy Fallon, Steph Curry and Post Malone.
“Everyone is chasing FOMO,” Ozair said.
No regrets
Many NFT owners bought their tokens last year and in 2020 in hopes of seeing the value continue to rise, but “people now realize that is not always the case,” Ozair said.
For some NFT owners, however, it was never about making money. Connor Murphy of Denver said he bought two NFTs in 2020 simply to support the artist who created them.
“My NFTs can go up to $ 0, and I would not regret my purchases or see less value in them personally,” Murphy said. “This is where many others make the mistake. They go into this place to try to make money, while I have gone into this place to try to make a difference.”
