You told people what an NFT was and they looked at you strange. Normal. How could an NFT of a tweet be worth 2.9 million euros? How was a PNG of a rock worth 260,000 euros? Two years ago that didn’t seem to make sense, and now it seems that reason has triumphed, because those NFTs are worth nothing, or almost nothing: the market has collapsed and is mortally wounded.
The first tweet is a good portrait of the NFT market. Jack Dorsey, co-founder of Twitter, seemed to be clear that this was the future, and sold the NFT of the first message on Twitter (published on March 21, 2006) for 2.9 million euros. Just a year later the buyer tried to sell it for $48 million. Do you know what the best bid he received is? One for 280 dollars.
NFTs collapse. That case is a good reflection of this entire segment. A report by dappGambl with data from NFT Scan and CoinMarketCap reveals that of the 73,257 asset collections analyzed by researchers, 69,795, just over 95%, had a value of zero ETH.
23 million users affected. According to the report’s estimates, almost 23 million people own these worthless NFTs. As the study’s authors explain, “this discouraging reality should serve as a brake on the euphoria that has often surrounded the NFT space.”
A fever that came and went. These digital assets, often representations of artistic works or collectibles – such as the famous Bored Ape Yacht Club – that were registered in a blockchain, were a phenomenon in 2021 and part of 2022. Everyone wanted to sign up and this new fever of Gold touched companies and industries—including the artistic industry—of all kinds.
Too much supply for so little demand. dappGambl’s study reveals that 79% of all NFT collections have not had a single sale, and this oversupply has created a market in which buyers are failing to revive enthusiasm for this technology.
NFTs that are worth something are worth very little. Of the 8,850 collections with the highest value by market capitalization, 18% are worth nothing and 41% are worth between $5 and $100. Less than 1% have a price of more than $6,000, something striking considering that two years ago it was normal to find NFTs that exceeded a million dollars.
Flag speculation. In the report, those responsible for dappGambl highlighted how “it is clear that a significant portion of the NFT market is characterized by speculative and hopeful pricing strategies that are far removed from the actual trading history of these assets.”
Surrender. Bloomberg recently mentioned how according to DappRadar, the volume of transactions with NFTs had fallen by 81% between January 2022 and July 2023. The prices of assets such as those of Bored Ape Yacht Club or CryptoPunks were at minimum levels in the last two years, and the industry’s own promoters made it clear: “what you are seeing is a surrender.” OpenSea, one of the largest markets, has been to migrate to an optional commission model to try to encourage operations.
Waiting for a miracle. In fact, they conclude in dappGambl, this disconnection between the prices shown and the actual sales suggests that many sellers are waiting for a miracle: one that will cause a brutal resurgence of interest in NFTs like the one there was in 2021. That, say the responsible for the report “might never happen again.
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