NFT scam? Myth or reality? — Crypto on

For the crypto market as a whole, and The NFT market in particular has fallen on hard times. After the Luna cryptocurrency fell in price by more than 99% in three days, and the algorithmic stablecoin TerraUSD (UST) lost its peg to the dollar, the entire crypto industry slid down the rabbit hole. Yesterday, Bitcoin was trading below $25,000 and ETH was trading below $1,800. Although the rebound has already begun today, the market for non-fungible tokens has also been strongly affected by these panic sentiments of recent days. recent articles we wrote that despite good performance at the end of 2021 – beginning of 2022, the digital art market is overheated. The whole of 2021 and the beginning of 2022 was a hype time that made it difficult to see things objectively. And it worked both ways – because some thought that growth would continue indefinitely, while others began to associate NFT exclusively with the bloated digital art market. Due to the fact that many people associate the NFT market exclusively with tokenized images, they are in a hurry to declare the entire industry a scam. Non-fungible tokens are not only art, but also GameFi, digitized rights, marking real assets and much more. Let’s try to figure out what is happening in the market now in order to separate the wheat from the chaff.

Bubble burst?

According to the data Dune Analytics, on the largest NFT marketplace, at the end of the previous week, a significant decline could be observed – on Sunday, non-fungible tokens were sold in the amount of only 52 million dollars. The platform hasn’t seen such low daily trading volume since December, even during the big drop in April, trading rarely dropped below $100 million.

According to The Block, the price of the cheapest NFT in the popular Bored Ape Yacht Club collection has dropped 25% since last week to 88 ETH ($1.7 million), and the price of the cheapest NFT from CryptoPunks fell by 15% to 52.5 ETH.

But NFT It’s too early for skeptics to gloat. Analyst company Chainalysis in one of its recent reports noted that total sales in 2022 are already hit $37 billion as of the first week of May 2022, up from $40 billion for all of 2021!

If we take into account the overheated realm of digital art in the NFT market, the turbulence in the crypto market due to the collapse of Luna and UST, the reduction of the Federal Reserve money supply, escalating geopolitical situation and other negative macroeconomic indicators, the resilience of the non-fungible token market is amazing. Yes, and at the end of the cryptohype of 2017-2018, many people predicted the death of cryptocurrencies, but the market put all the skeptics in their place after a while.

What will happen next?

We remain true to the forecast we made in article about the development of the crypto market in 2022 – although the digital art market is really overvalued, NFT has yet to reach its potential. Non-fungible tokens need to be understood more than collections of monkeys and pixel punks. The biased negative attitude towards NFT among skeptics was formed precisely against the background of volatile trading in assets divorced from reality. NFTs can and should have intrinsic (backed up) value, for example, for use in fractional real estate ownership or as a promo code. In order for the NFT market to mature, a strong link to real assets and services is needed. For the market circulation of tokenized assets, trading platforms are needed with a guarantee of a transaction within the legal framework and the transfer of ownership.

Leave a Reply

Your email address will not be published.