news devices 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 fallen into a downward spiral. Non-fungible tokens (NFTs) are no exception to the rule…
- NFT is slowly waning
- June and July, disastrous months for the NFT sector
- Only the largest NFT groups resist
NFT is slowly waning
In August 2021 a speculative bubble around NFTs began. Specifically, in July 2021, the sales volume fell from 360 million euros to 3.8 billion euros in just one month. This surge in trading volumes led to an unprecedented excitement around NFTs in the following months. The huge influx of new customers has driven up the prices of all kinds of kits.
Unique JPEGs in the form of NFTs were a major contributor to this excessive lust. Once the train started, several hundred NFT sets were born each week. In addition to the societal aspect, these groups were mainly the target of financial motives on the part of creators and collectors. After a few marketing runs, some NFT groups were able to amass hundreds of thousands of followers in just a few weeks. The limited number of copies (generally less than 10,000) and the hope of acquiring a rare NFT greatly stimulated investors to switch from one group to another.
This frenzy worked for the market as the cumulative total of trade never fell below the $2 billion threshold, until June…
June and July, disastrous months for the NFT sector
While the NFTs looked healthy from the crypto drop in the first five months of 2022, they weren’t able to withstand Bitcoin’s drop in June. By the way, from €28,000 to €18,000, the price of the first cryptocurrency seems to have brought all NFT down with it.
According to The Block, the volume rose to 3.20 billion euros in May, and fell to 864 million euros. So the exchanges were split into three in just one month. And things are not going well…
July is more worrying as total trading volumes rose to 663 million, a decrease of 200 million euros compared to July’s stats.
The majority of these sales were made on OpenSea. It has been rated as the most intuitive buying and selling platform in the NFT sector, yet the company has had to lay off 20% of its workforce, particularly due to declining interest in the market.
Companies in the sector are not the only ones suffering from this situation. Investors have also seen a sharp drop in the value of their investments. However, some groups are not set to disappear any time soon.
Only the largest NFT groups resist
Despite this massive drop, few NFTs seem to be holding up the market downturn.
Among them we find:
- Bored Monkey Yacht Club
According to NonFungible, these “reserved” groups will account for 30% of the total volume of exchanges in recent months. These three groups belong to the studio Yuga Labs, so we note that the market is partially monopolized by one entity that seems to understand the way it works. With the arrival of the metaverse for Otherdeed, Yuga Labs still has leads to bend to attract new investors to its collections.
While this sector has shown weakness lately, it has also shown that it can become very speculative with just the touch of a finger. As a result, for other groups, the game is definitely over until a possible next speculative bubble around NFTs appears. It is important to note that apart from NFTs, new innovations usually encounter their highly volatile movements led by financial investments.
As the vision is no longer blurred by this speculative hype, it is interesting to see how NFTs will be able to develop in sectors other than digital art. Many companies have also faced the challenge of advancing the use of NFTs beyond the media hype, with the goal of building safer rules around the technology and finding real use for it.
What is NFT?
NFT is an acronym for Non Fungible Token or Non-Fungible Token in French. NFTs are crypto tokens issued on the blockchain.
By exploiting this technology in the genesis of cryptocurrencies, NFTs record inviolable properties in this virtual registry. As a result, NFTs are true certificates of digital ownership.
Is NFT necessarily an image?
A distinction must be made between NFT and its associated object. In fact, the non-replaceable token is above all a virtual ownership certificate and not the digital file as such. An NFT is usually associated with an image or video, but it can also take the form of text, music, or any other digital format.
What is NFT used for?
NFTs are generally used to assert property rights over the Internet. Thus, the owner of a virtual business token can collect royalties, ensure respect for the intellectual property of their digital subject, etc.
This feature has particularly enabled NFT to shine in art by creating value and scarcity in digital images available on the web. In addition to art, this technology offers versatility in several sectors such as video games, product traceability, etc.
How is the value of the NFT determined?
These tokens are non-fungible, that is, they have a unique value unlike cryptocurrencies, which can be exchanged (1 bitcoin = 1 bitcoin).
Therefore, the price of the NFT is set arbitrarily by the owner of the token. This price is usually in cryptocurrency, most often in Ether (ETH).
How do you buy and sell NFTs?
NFTs are generally bought or resold on trading platforms such as Opensea or Foundation.
What is NFT Mint?
“Mint,” or strike in French, is the initial sale of the token. In order to become a permanent part of the blockchain ledger, these new tokens must be an instrument. Through this procedure, the user comes to complete a transaction with his fee to see his token appear live on the blockchain.