After the Bitcoin crisis, NFTs are also in freefall

News hardware After the Bitcoin crisis, NFTs are also in free fall

The crypto winter does not only affect virtual currencies. Since the fall of Bitcoin, everything related to the cryptocurrency sector has been caught in a downward spiral. Non-fungible tokens (NFT) are no exception to the rule…

Summary

  • The NFT phenomenon is slowly waning
  • June and July, disastrous months for the NFT sector
  • Only the largest NFT collections resist

The NFT phenomenon is slowly waning

It was in August 2021 that the speculative bubble around NFTs began. To be precise, the sales volume in July 2021 fell from 360 million euros to 3.8 billion in just one month. The increase in these trading volumes led to unprecedented excitement around NFTs in the following months. The massive influx of new customers has driven up the price of all kinds of collections.

Unique avatar JPEGs in the form of NFTs have been a major contributor to this excessive desire. When the train started, several hundred NFT collections were born every week. In addition to the community aspect, these collections were mainly subject to economic motivation of creators and collectors. After a few marketing operations, some NFT collections managed to accumulate hundreds of thousands of followers in a matter of weeks. The limited number of copies (generally less than 10,000) and the hope of obtaining a rare NFT greatly motivated investors to switch from one collection to another.

This frenzy worked in favor of the market as the cumulative sum of trading never fell below the 2 billion threshold until June…

June and July, disastrous months for the NFT sector

While NFTs appeared unscathed by the fall in cryptocurrency in the first five months of 2022, they were unable to withstand Bitcoin’s fall 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, the amount increased to 3.20 billion euros in May, fell to 864 million euros. The stock exchanges have therefore been divided by three in just one month. And it’s not going well…

The month of July is even more alarming with the sum of trading volumes rising to 663 million, a decrease of 200 million euros compared to the statistics for the month of July.

NFT – The block

The majority of these sales were made on OpenSea. Touted as the most intuitive selling and buying platform in the NFT sector, the company nevertheless had to lay off 20% of its workforce, mainly due to the decline in market interest.

Companies in the sector are not the only ones suffering from the situation. Investors have also seen the value of their investment drop drastically. Nevertheless, some collections are not destined to disappear anytime soon.

Only the largest NFT collections resist

Despite this massive drop, a few NFT collections seem to be holding up against the market decline.

Among them we find:

  • Meebits
  • Bored Ape Yacht Club
  • CryptoPunks
After the Bitcoin crisis, NFTs are also in freefall

According to NonFungible, these “saved” collections would represent 30% of the entire volume of exchanges in recent months. These three collections belong to the Yuga Labs studio, so we note that the market is partially monopolized by a single entity that seems to understand how it works. With the arrival of their Otherdeed metaverse, Yuga Labs still has strings to its bow to attract new investors to its collections.

While this sector has shown weakness of late, it has also shown that it can become highly speculative at the snap of a finger. As a result, for the other collections, it is probably game over until a possible next speculative bubble around NFTs. It is important to note that apart from NFTs, new innovations usually face its ultra-volatile movements led by financial investments.

With the vision no longer clouded by this speculative noise, it will be interesting to see how NFTs will be able to develop in sectors other than digital art. Several companies have also taken up the challenge of developing the use of NFTs after the media hype, with the aim of building sonar bases around the technology and finding real use in it.

About NFTs

What is an NFT?

An NFT is the abbreviation of Non Fungible Token or non-fungible token in French. NFTs are cryptographic tokens issued on a blockchain.

Leveraging this technology in the creation of cryptocurrencies, NFTs inscribe inviolable properties in this virtual registry. 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 associated object. In fact, the non-fungible token is above all a virtual property certificate and not the digital file as such. An NFT is usually associated with a photo or video, but it can also take the form of text, music or any other digital format.

What is an NFT used for?

NFTs are generally used to assert property rights online. The owner of a token of a virtual work can thus collect royalties, ensure respect for the intellectual property of his digital object, etc.

This feature has especially allowed NFT to shine in art by creating value and rarity in digital images available online. In addition to art, this technology also offers several applications in several sectors, such as in video games, the traceability of a product, etc.

How is the value of an NFT defined?

These tokens are non-fungible ie. they have a unique value unlike cryptos which are fungible (1 bitcoin = 1 bitcoin).

The price of an NFT is therefore arbitrarily set by the owner of the token. This price is usually in cryptocurrency, most of the time in Ether (ETH).

How to buy and sell NFTs?

NFTs are generally bought or resold on trading platforms such as Opensea or Foundation.

What is an NFT coin?

“Mint” or strike in French, is the initial sale process of a token. To permanently become part of the blockchain ledger, these new tokens must be in shape. By this action, the user gets to complete a transaction with his fees to see his token appear first hand on the blockchain.

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