News hardware After the Bitcoin crisis, NFTs are also in free fall
The winter of cryptocurrencies isn’t just about virtual currencies. Since the fall of Bitcoin, everything related to the cryptocurrency industry has been in a downward spiral. Non-fungible tokens (NFTs) are no exception to the rule …
- The NFT phenomenon is slowly diminishing
- June and July, catastrophic months for the NFT sector
- Only the largest NFT collections resist
The NFT phenomenon is slowly diminishing
It was in August 2021 that the speculative bubble around NFTs began. Specifically, in July 2021, the sales volume went from 360 million euros to 3.8 billion in just one month. The surge in these trading volumes led to unprecedented excitement for NFTs in the following months. The massive influx of new customers has pushed up the price of all types of collections.
Unique avatar JPEGs in the form of NFTs have contributed significantly to this excessive lust. Once the train started, several hundred NFT collections were born every week. In addition to the community aspect, these collections were mainly the object of monetary motivation by creators and collectors. After some marketing operations, some NFT collections have managed to accumulate hundreds of thousands of followers in a few weeks. The limited number of copies (generally less than 10,000) and the hope of obtaining a rare NFT have amply motivated investors to switch between collections.
This frenzy worked in the market’s favor as the cumulative amount of trade never dropped below the 2 billion mark, until June …
June and July, catastrophic months for the NFT sector
While NFTs looked unscathed from the cryptocurrency drop in the first five months of 2022, however, they were unable to resist 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 NFTs down.
According to The Block, the volume rose to € 3.20 billion in May, and then dropped to € 864 million. The exchanges were then split by three in just one month. And things are not going well …
The month of July is even more alarming with the sum of the volumes traded rising to 663 million, down by 200 million euros compared to the statistics for the month of July.
Most of these sales were made on OpenSea. Designated as the most intuitive buying and selling platform in the NFT industry, the company has nevertheless had to lay off 20% of its workforce, particularly due to declining market interest.
Companies in the sector are not the only ones affected by the situation. Investors have also seen the value of their investment drop dramatically. However, some collections are not destined to disappear anytime soon.
Only the largest NFT collections resist
Despite this massive decline, some NFT collections seem to be resisting the market decline.
Among these we find:
- Bored Ape Yacht Club
- The cryptopunks
According to NonFungible, these “saved” collections would represent 30% of the entire volume of trade in recent months. These three collections belong to the Yuga Labs studio, so we notice that the market is partially monopolized by a single entity that seems to understand how it works. With the arrival of its metaverse Otherdeed, Yuga Labs still has threads to attract new investors to its collections.
While this sector has shown weakness in recent times, it has also shown that it can become highly speculative in an instant. Consequently, for the other collections, the game is definitely over until a possible next speculative bubble around NFTs. It is important to note that, aside from NFTs, new innovations usually address its ultra-volatile movements driven by financial investments.
As vision is no longer clouded by this speculative din, it is interesting to see how NFTs can develop in sectors other than digital art. Several companies have also taken up the challenge of developing the use of NFTs after the media noise, with the aim of building more solid foundations around the technology and finding real use in it.
What is an NFT?
An NFT is short for Non Fungible Token or non-fungible token in French. NFTs are cryptographic tokens issued on a blockchain.
Leveraging this technology to the genesis of cryptocurrencies, NFTs register inviolable properties in this virtual ledger. Consequently, NFTs are true claims of digital ownership.
Is an NFT necessarily an image?
A distinction must be made between an NFT and the object associated with it. The non-fungible token, in fact, is above all a virtual ownership 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 for?
NFTs are generally used to enforce property rights online. Therefore, the owner of a token of a virtual work can collect royalties, guarantee respect for the intellectual property of its digital object, etc.
This feature has in particular allowed NFT to shine in art by creating value and rarity in digital images available on the web. Furthermore, beyond the art, this technology offers multiple uses in different sectors such as in video games, in the traceability of a product, etc.
How is the value of an NFT defined?
These tokens are not fungible, i.e. they have a unique value unlike cryptocurrencies, which are fungible (1 bitcoin = 1 bitcoin).
The price of an NFT is therefore arbitrarily set by the token owner. This price is usually in cryptocurrency, most often in Ether (ETH).
How to buy and sell NFTs?
NFTs are typically bought or resold on trading platforms such as Opensea or Foundation.
What is an NFT mint?
The “Mint” or strike in French, is the initial sale process of a token. To permanently join the blockchain ledger, these new tokens must be new. With this action, the user gets to complete a transaction with his fees to see his token appear in first person on the blockchain.