news hardware After the Bitcoin crisis, NFTs are also in free fall
The winter of cryptos does not only affect virtual currencies. Ever since Bitcoin fell, everything related to the cryptocurrency sector has been on a downward spiral. Non-Fungible Tokens (NFT) are no exception to the rule…
- The NFT phenomenon is slowly subsiding
- June and July, disastrous months for the NFT sector
- Only the largest NFT collections resist
The NFT phenomenon is slowly subsiding
In August 2021, the speculative bubble surrounding NFTs began. Exactly in July 2021, the sales volume fell from 360 million dollars to 3.8 billion dollars in just one month. The increase in these trading volumes led to unprecedented excitement around NFTs in the months that followed. The massive influx of new customers has pushed up prices for collections of all kinds.
Unique avatar JPEGs in the form of NFTs have been a major contributor to this excessive lust. Once the train started, several hundred NFT collections were born each week. In addition to the community aspect, these collections were primarily the subject of the financial motivation of the creators and collectors. After some marketing actions, some NFT collections managed to amass hundreds of thousands of followers in a few weeks. The number of limited pieces (usually fewer than 10,000) and the hope of a rare NFT largely motivated investors to move from one collection to another.
This frenzy was positive for the market as the cumulative trading total never fell below the 2 billion mark until June…
June and July, disastrous months for the NFT sector
While NFTs seemed unscathed by the cryptocurrency’s decline in the first five months of 2022, they couldn’t resist Bitcoin’s decline in June. By the way, from $28,000 to $18,000, the price of the first cryptocurrency seems to have taken all NFTs down with it.
According to The Block, volume rose to $3.20 billion in May, falling to $864 million. The exchanges were therefore divided by three in just one month. And it’s not going well…
The month of July is even more alarming as total trading volumes rose to 663 million, a decrease of 200 million dollars compared to the statistics for the month of July.
The majority of these sales were made on OpenSea. Dubbed the most intuitive selling and buying platform in the NFT space, the company still had to lay off 20% of its workforce, largely due to reduced market interest.
Industry companies are not the only ones suffering from the situation. Investors, too, have seen the value of their investment fall drastically. Still, some collections aren’t destined to disappear anytime soon.
Only the largest NFT collections resist
Despite this massive decline, some NFT collections appear to be resisting the market downturn.
Below we find:
- The Bored Ape Yacht Club
- Les CryptoPunk
According to NonFungible, these “saved” collections would account for 30% of the total exchange volume over the last few months. These three collections are owned by the Yuga Labs studio, so we find that the market is partially monopolized by a single entity that seems to understand how it works. With the arrival of its Otherdeed metaverse, Yuga Labs still has its hands full attracting new investors to its collections.
While this sector has shown weakness of late, it has also shown that it can become highly speculative with a snap of the fingers. As a result, pending a possible next bubble around NFTs, it’s certainly game over for the other collections. Importantly, new innovations alongside NFTs are usually exposed to their ultra-volatile moves led by financial investments.
With the view no longer clouded by this speculative noise, it’s interesting to see how NFTs may develop in sectors other than digital art. Several companies have also taken on the challenge of developing the use of NFTs after the media rush, aiming to build more solid foundations around the technology and find real application in it.
What is an NFT?
An NFT is short for Non Fungible Token or non-fungible token in French. NFTs are cryptographic tokens issued on a blockchain.
By using this technology in the creation of cryptocurrencies, NFTs inscribe inviolable properties in this virtual register. As a result, NFTs are true attestations of digital ownership.
Is an NFT necessarily an image?
A distinction must be made between an NFT and the object associated with it. In fact, the non-fungible token is above all a virtual certificate of ownership and not the digital file as such. An NFT is usually associated with a photo or video, but can also be in the form of text, music, or some other digital format.
What is an NFT used for?
NFTs are generally used to assert intellectual property rights on the Internet. Thus, the owner of a token of a virtual work can collect royalties, ensure respect for the intellectual property of his digital object, etc.
This feature has particularly allowed the NFT to shine in the arts by creating value and rarity in digital images available on the web. Beyond art, this technology offers a wide range of possible uses in various areas, such as in video games, traceability of a product, etc.
How is the value of an NFT defined?
These tokens are non-fungible meaning they have a unique value unlike cryptos which are fungible (1 bitcoin = 1 bitcoin).
The price of an NFT is thus set arbitrarily by the owner of the token. This price is usually in cryptocurrency, mostly in Ether (ETH).
How do I buy and sell NFTs?
NFTs are generally bought or resold on trading platforms such as Opensea or Foundation.
What is an NFT coin?
The “mint” or strike in French is the initial process of selling a token. In order to permanently become part of the blockchain ledger, these new tokens must be mint. Through this action, the user completes a transaction with their fees to see their token appear first-hand on the blockchain.
Leave a Reply