Equipment news Since the Bitcoin crisis, NFTs are also in free fall.
Published on 06/08/2022 at 14:52
Cryptocurrency winter affects not only virtual currencies. After the fall of Bitcoin, everything related to the cryptocurrency sector fell into a downward spiral. Non-Fungible Tokens (NFTs) are no exception to the rule…
- The NFT Phenomenon Is Slowly Weakening
- June and July, disastrous months for the NFT sector
- Only the largest collections of NFTs resist
The NFT Phenomenon Is Slowly Weakening
It was in August 2021 that the speculative NFT bubble began. It was in July 2021 that sales fell from 360 million euros to 3.8 billion in just one month. The surge in these trading volumes led to unprecedented NFT hype in the following months. The massive influx of new buyers has led to higher prices for all kinds of collections.
Unique NFT-shaped avatar JPEGs have been a major contributor to this over-the-top lust. As soon as the train started moving, several hundred NFT collections were born every week. Apart from the public aspect, these collections were mainly the object of monetary motivation on the part of creators and collectors. After several marketing ops, some NFT collections have managed to garner hundreds of thousands of subscribers in a matter of weeks. The number of limited pieces (usually less than 10,000) and the hope of obtaining a rare NFT have largely motivated investors to move from one collection to another.
This madness worked in the market’s favor as the cumulative trading amount never dropped below the 2 billion threshold until June…
June and July, disastrous months for the NFT sector
Although NFTs did not seem to be affected by the fall of the cryptocurrency in the first five months of 2022, however, they were unable to withstand the June fall of bitcoin. By the way, from 28,000 to 18,000 euros, the price of the first cryptocurrency seems to have swallowed up all NFTs.
According to The Block, in May, the volume rose to 3.20 billion euros, fell to 864 million euros. Thus, the exchanges were divided into three in just one month. And things aren’t going well…
July is even more worrisome: the amount of trading volumes increased to 663 million, which is 200 million euros less than the statistics for July.
NFT – block
Most of these sales were made on OpenSea. Hailed as the most intuitive selling and buying platform in the NFT sector, the company was nonetheless forced to lay off 20% of its workforce, in part due to declining market interest.
Companies in this sector are not the only ones suffering from the situation. Investors also experienced a sharp drop in the value of their investments. However, some collections are not destined to disappear anytime soon.
Only the largest collections of NFTs resist
Despite this massive drop, several collections of NFTs seem to be surviving the market downturn.
Among them we find:
- Bored Ape Yacht Club
According to NonFungible, these “saved” collections will account for 30% of all exchanges in recent months. These three collections are owned by Yuga Labs, so we note that the market is partially monopolized by one organization that seems to understand the work. With the emergence of its Otherdeed metaverse, Yuga Labs still has the opportunity to attract new investors to its collections.
Although this sector has shown weakness lately, it has also shown that it can become very speculative at the snap of a finger. As a result, for other collections, the game is probably over before the possible next speculative NFT bubble. It is important to note that, in addition to NFT, new innovations usually face its ultra-volatile movements driven by financial investments.
With the vision no longer clouded by this speculative noise, it’s interesting to see how NFTs can develop in sectors other than digital art. Several companies have also taken to developing the use of NFT following the media hype in order to build a more solid base around the technology and find real applications for it.
What is NFT?
NFT is an abbreviation for Non Fungible Token or Non-Fungible Token in French. NFTs are cryptographic tokens issued on the blockchain.
Using this technology at the birth of cryptocurrencies, NFTs inscribe inviolable properties in this virtual ledger. As a result, NFTs are true evidence of digital ownership.
Is an NFT necessarily an image?
It is necessary to distinguish between an NFT and its associated object. Indeed, a non-fungible token is primarily a virtual property certificate, and not a digital file per se. NFT is usually associated with a photo or video, but can also take the form of text, music, or any other digital format.
What is NFT used for?
NFTs are commonly used to assert property rights on the Internet. Thus, the owner of a virtual work token can collect royalties, ensure that the intellectual property of their digital object is respected, and so on.
This feature allowed NFT to assert itself in the arts, creating the value and rarity of digital images available on the Internet. In addition, apart from art, this technology offers many applications in several sectors such as video games, product tracking, etc.
How is the value of NFTs determined?
These tokens are not fungible, meaning they have a unique value, unlike cryptocurrencies, which are fungible (1 bitcoin = 1 bitcoin).
Thus, the price of NFT is arbitrarily set by the owner of the token. This price is usually quoted in a cryptocurrency, most commonly Ether (ETH).
How to buy and sell NFTs?
NFTs are usually bought or resold on trading platforms such as Opensea or Foundation.
What is an NFT mint?
“Met yard” or strike in French is the initial process of selling the token. To permanently become part of the blockchain ledger, these new tokens must be minted. With this action, the user completes the transaction with their fees to see their token appear on the blockchain first hand.