Boom and Bust: How NFTs Went the Penny Way

Boom and Bust: How NFTs Went the Penny Way

In early 2021, NFTs were promoted as a way for artists to earn life-changing money. All you need is a token! So artists raced to buy ether so they could release NFTs from their work. Only, the money hasn’t flowed in – unless your name is Beeple.

Now all that’s left of the over-promoted NFT market is dust in the wind. NFTs have become an unattractive part of history. People don’t trade it, the only ones talking about it are trying to sell it.

Since the beginning of this year, monthly transaction volume on OpenSea, the most popular NFT marketplace, has fallen by 90 percent. In August, monthly transaction volume on OpenSea reached $500 million, compared to $4.8 billion in January, according to The Dune Analysis Dashboard.

The biggest indication of the hype dissipating came in July when OpenSea announced that layoffs of 20 percent of its employees. (They didn’t mention the total number of people, but after the event, there were only 230 OpenSea employees left.)

These layoffs coincided with a decline in the broader crypto markets. Bitcoin has lost 57 percent of its value since January, dropping to $20,000. Ether, the second most popular cryptocurrency, fell 58 percent, to $1,500, during the same time frame. Several large cryptocurrency lenders have filed for bankruptcy.

The Bored Ape Yacht Club group in OpenSea displayed on the phone screen. Photography by Jakub Porzycki/NurPhoto via Getty Images.

With inflation rocking the stock market, the last thing retail traders want to invest in right now are illiquid NFTs. By their nature, NFTs are hard to sell. While one bitcoin is as good as any other, you have to find a private buyer for your NFT – and if the private buyer doesn’t come, you may be stuck holding your NFT for a long time.

Another noticeable sign that NFT markets have cooled is that the bottom-line price for popular NFT projects is dropping. The minimum bid for anyone wishing to bid on Bored Ape Yacht Club NFT is currently 78 ETH ($117,000), according to CoinGecko. At its peak this year, on April 30, the base price of BAYC NFT was 153 ETH ($530,000).

A sign of bad taste

In a place marked by rampant scams and piracy, the word “NFT” is starting to turn into a dirty word in many circles. Since NFTs are so easy, opportunists jump at any new opportunity to make money.

The death of Queen Elizabeth II saw a flood of Queen Elizabeth-themed NFT sets and special edition NFTs into many existing projects. Entering the market.

When David Bowie’s property announced plans to launch NFTs with OpenSea, fans They were angry. “How about not dealing with an NFT guff and raising money for charity without using a pyramid scheme,” One critic wrote.

The big brands entering the field are now feeling a particularly backlash. One of the latecomers to the NFT party, Starbucks in action They were widely mocked To issue an extension of its rewards program which will allow customers to collect NFTs.

Starbucks must have known the reaction to the NFT launch would be bad, they immediately disabled responses on the spot. Twitter ad.

Celebrities who have previously pushed so-called “premium” NFTs may be less inclined to do so. Last month, the truth in advertising Sent messages to 17 celebritiesincluding Jimmy Fallon and Gwyneth Paltrow, reminding them that not disclosing physical links when posting about something on social media violates FTC guidelines.

Madonna and Pebble, mother of technologyStill from NFT video work, 2022, courtesy of the artists

While NFTs continue to be obnoxious, the bad news is that they will be quite slow to die. After pumping huge money into the space, venture capitalists will want to see returns on their investments — even if it means good money after bad money.

In May, venture capital firm Andreessen Horowitz announced that it had raised a $4.5 billion crypto fund, the largest in the industry to date. This money has to go somewhere.

The only thing that might make a difference to how the world sees NFTs is that Ethereum, the blockchain on which most NFTs live, is turning out to be a more energy-efficient proof, so that the network no longer consumes the power of a small country. Ethereum’s dropping of CO2 has been one of the biggest public objections to NFTs.

We’re also seeing a transition away from technical NFTs into gaming, with NFT promoters desperately trying to give them a spin. Since August 1, Web3 games and metaverse projects have raised more than $750 million, according to DappRadar. Report.

After raising $450 million on a tour led by Andreessen Horowitz in March, Yuga Labs, the company behind Bored Apes Yacht Club, has turned to creating a massively multiplayer game, whose mission is now to take off.

Even when common sense says NFTs have gone the Beanie Babies route, venture capitalists, and their over-funded projects, will still get past the point where we all stopped listing.

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