“Wall Street Journal” sounds the alarm: The market for non-fungible tokens is collapsing. An analysis that crypto enthusiasts do not share.
“Is this the beginning of the end for NFTs?” This is the question that is being askedWall Street Journalin an article published earlier this month. After a year 2021 of all records, the NFT market, these digital certificates of authenticity stored on blockchain and associated with a virtual object (photo, video, land in the metaverse, etc.), would be on the verge of collapse, according to the large US daily newspaper.
Citing the analysis site Nonfungible.com (see graph below), the “Wall Street Journal” points to a drop in sales volume of -92% over seven months. After peaking at 225,000 in September 2021, the average number of daily sales plunged to 19,000 in early April and has not really picked up speed since.
The newspaper also reports a sharp drop in activity among holders of non-fungible tokens, illustrated by a drop of -88% in the number of active “wallets”, ie. 14,000 in early May against 119,000 in November 2021. As a reminder, the “wallets” are digital wallets, such as Metamask Where Coinbase walletwhich enables both the storage of cryptocurrencies and NFTs, the execution of transactions and the linking (editor’s note: on the same principle as Facebook Connect) to NFT marketplaces where the best known is Open sea.
The Wall Street Journal explains the fall as “rising interest rates that have hit risky bets in all financial markets – and NFTs are among the most speculative assets”. He also claims that demand would be much higher than supply, in the order of five NFTs for a buyer. The general public seems to be losing interest in NFTs if one is to believe the search volume on Google.
An alarmist analysis, which crypto-enthusiasts far from share. As blockchain entrepreneur Sina Estavi, who acquired the first Tweet ever in history for $ 2.9 million in March 2021 and only receivedan offer of about $ 24,000 since he put it back on sale in April, it would only be a “normal fluctuation”. Nothing to panic about.
Others question the figures provided by the Wall Street Journal, believing that the number of transactions and users is actually much higher. The enthusiasm for NFTs is not dead, on the contrary! Proof of this is the recent record sale of land in the Otherside meta-verse, the new project from the creators of Bored Ape Yacht Club, which generated over $ 300 million in revenue in just three hours.
At the same time, innovation and investment in the sector continue. Coinbase, a leading cryptocurrency exchange listed on Nasdaq, has just launched its own NFT marketplace which already has more than 4 million members. Meta, ex-Facebook, confirms for its part the arrival of non-fungible tokens on its Instagram platform. Originally reserved for certain creators and collectors, this new feature will then be extended to the general public.
Stabilization rather than collapse
Above all, let’s remember where we start from. Last year, the market had exploded (+ 21,000% compared to 2020). It was literally madness, both in the amount of tokens created and on the price side. This is why the Nonfungible.com website, the same as the American newspaper quotes, rather speaks of a “stabilization in line with the last quarter of 2021”. “With nearly $ 8 billion traded in the first quarter of 2022, you can not really consider the market as collapsing,” he said.
If the NFT market is not shifting to the left, on the other hand, it is marking time. The uncertainty associated with the economic and international situation (inflation, interest rate rises, war in Ukraine) pushes buyers to a certain caution against assets that are still considered “too” risky. The decline in cryptocurrencies in recent days is also not reassuring (editor’s note: -50% for Bitcoin over the last six months). Incidentally, Nonfungible.com finds out that in 2022 “it’s not that easy to make money in NFTs anymore”.
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