Could the 55,000 NFTs or non-fungible tokens sold by US start-up Yuga Labs on April 30 for 303 million euros be the tree that hides the forest? According to many experts, it would actually be wrong to rely on this unusual episode to judge the health of the market, as the hypothesis of the crash seems more and more credible.
Since November, the major cryptocurrencies have been in free fall. They had reached historic levels at the height of the Covid-19 pandemic, but the curve is now clearly reversed. The most famous of them, which is also the most expensive, the famous Bitcoin, has thus lost 35% of its value since April: it still traded at 41,902 euros on April 1 to fall to 27,283 euros at the time of writing. . According to industry experts, NFTs, which are heavily dependent on the cryptocurrency ecosystem, may be next on the list.
Will speculation prevail over NFTs?
For the expert cryptocurrency analyst Sheena Shah, “It is becoming clear that high cryptocurrency prices were based on speculation, with very little demand for real use.” However, she notes that many NFT buyers have also acquired cryptocurrencies for the sole purpose of reselling them at a higher price. If speculation is responsible for the bursting of the cryptocurrency bubble, then could it also drag NFTs into the abyss?
That is the opinion of the American bank Morgan Stanley, which warns its customers in a long report published on 12 May. The institution explains that the marked decline in Bitcoin and Ethereum, the two most stable cryptocurrencies on the market, can not be attributed to the decline of the stock market, but the speculation mechanics. She advises investors holding NFTs or parts of virtual land in the metaverse to be vigilant: both have been the subject of similar speculation in recent months. The bubble they represent can also burst.
The report also notes that while cryptocurrencies began their slide in November, it was the recent collapse in early May of TerraUSD, the third most stable currency on the market, that raises the most concern: this fall confirms the trend and leaves the market without security or stability , “calls for a broad reassessment of the prices at which many cryptocurrencies will be traded”.
Along with the decline in cryptocurrencies, the NFT market itself appears to be showing increasing signs of weakness. A recent report from research firm Chainalysis notes that it fell significantly in 2022 after one “explosive growth” in 2021. While NFT transactions still represented $ 3.9 billion (€ 3.6 billion) in the week of February 13, they reached only $ 964,000 (€ 903,000) in the week of February 13, which is their lowest level since last summer.
When Coinbase, one of the most popular cryptocurrency exchanges, announced the creation of a platform dedicated to NFTs last fall, millions of users signed up for the waiting list. Since the launch of the project on May 4, the figures seem to testify to some cooling: Only 1,200 NFT owners have completed 1,013 transactions for a total sales volume of 252,000 euros. On OpenSea, the main NFT exchange, the exchanges also appear to have a hit with less than 245,000 users in March, which is the lowest level since June 2021 compared to 546,000 at the beginning of the year.
As for Yuga Labs, since the sale on April 30, the young company has been discreet: the cryptocurrency that it launched on this occasion, ApeCoin, lost 70% of its value in one month and its famous collection of NFTs, the cartoon-like monkeys. The “Bored Ape Yacht Club” series, sees its value melt away day after day: the Bored monkey the cheapest thus went from 300,000 euros on 30 April to 170,000 euros on 23 May. Can the market turn around?