After the Bitcoin crisis, NFTs are also in free fall

News JVTech After the Bitcoin crisis, NFTs are also in free fall

The winter of cryptos does not only affect virtual currencies. Since the fall of Bitcoin, everything related to the cryptocurrency sector has gone into a tailspin. Non-fungible tokens (NFT) are no exception to the rule…

Overview

  • The NFT phenomenon is slowly decreasing
  • June and July, catastrophic months for the NFT sector
  • Only the largest NFT collections resist

The NFT phenomenon is slowly decreasing

It was in August 2021 that the speculative bubble surrounding NFTs started. Exactly, in July 2021, the sales volume fell from 360 million euros to 3.8 billion in just one month. The increase in these trading volumes led to unprecedented excitement around NFTs in the following months. The massive influx of new customers has driven up the price of all kinds of collections.

Unique avatar JPEGs in the form of NFTs have been a major contributor to this excessive lust. Once the train got going, several hundred NFT collections were born every week. Besides the community aspect, these collections were mainly the object of monetary motivation of creators and collectors. After some marketing operations, some NFT collections managed to collect hundreds of thousands of followers within a few weeks. The number of limited copies (usually less than 10,000) and the hope of getting your hands on a rare NFT largely motivated investors to move from one collection to another.

This madness worked in favor of the market, as the cumulative sum of the trade never fell below the 2 billion threshold, until June…

June and July, catastrophic months for the NFT sector

While NFTs appeared unscathed by the cryptocurrency’s decline in the first five months of 2022, they were unable to withstand Bitcoin’s June decline. By the way, from $28,000 to $18,000, the price of the first cryptocurrency seems to have taken all NFTs with it.

According to The Block, the volume that rose to 3.20 billion euros in May has fallen to 864 million euros. The exchanges have therefore been divided by three in just one month. And it’s not going well…

The month of July is even more alarming with an increase in the sum of trading volumes to 663 million, a decrease of 200 million euros compared to the statistics for the month of July.

NFT – The Block

The majority of these sales took place on OpenSea. Designated as the most intuitive selling and buying platform in the NFT industry, the company still had to lay off 20% of its workforce, largely due to declining market interest.

Not only the companies in the sector suffer from the situation. Investors have also seen the value of their investment plummet. Still, some collections will not disappear any time soon.

Only the largest NFT collections resist

Despite this huge drop, some NFT collections seem to be holding up against the market downturn.

Among them we find:

  • Bits
  • Bored Ape Yacht Club
  • The cryptopunks
After the Bitcoin crisis, NFTs are also in free fall

According to NonFungible, these “spared” collections would represent 30% of the total volume of exchanges in recent months. These three collections belong to the Yuga Labs studio, so we note that the market is partially monopolized by a single entity that seems to understand the mechanics. With the arrival of its Otherdeed metaverse, Yuga Labs is still in control of attracting new investors to its collections.

Although this sector has been weak lately, it has also shown that it can become highly speculative in an instant. As a result, the game is definitely over for the other collections until a possible next speculative bubble surrounding NFTs. It is important to note that apart from NFTs, new innovations usually face ultra-volatile movements led by financial investments.

As the vision is no longer clouded by this speculative noise, it will be interesting to see how NFTs will be able to develop in sectors other than digital art. Several companies have also taken on the challenge of developing the use of NFTs after the media clutter, with the aim of building a more solid foundation around the technology and making real use of it.

About NFTs

What is an NFT?

An NFT is the abbreviation of Non Fungible Token or non-fungible token in French. NFTs are cryptographic tokens issued on a blockchain.

Leveraging this technology in the creation of cryptocurrencies, NFTs inscribe inviolable properties in this virtual registry. As a result, NFTs are true digital property certificates.

Is an NFT necessarily an image?

A distinction must be made between an NFT and the object associated with it. After all, the non-fungible token is primarily a virtual ownership certificate and not the digital file as such. An NFT is usually associated with a photo or video, but can also take the form of text, music, or any other digital or physical format.

What is an NFT used for?

NFTs are generally used to assert online property rights. For example, the owner of a token of a virtual work can collect royalties, ensure respect for the intellectual property of his digital object, etc.

In particular, this feature has enabled the NFT to shine in art by creating value and rarity in digital images available on the Internet. Besides art, this technology also offers multiple applications in different sectors, such as in video games, the traceability of a product, etc.

How is the value of an NFT defined?

These tokens are non-fungible, i.e. they have a unique value unlike cryptos, which are fungible (1 bitcoin = 1 bitcoin).

The price of an NFT is therefore arbitrarily determined by the owner of the token. This price is usually in cryptocurrency, usually in Ether (ETH).

How to buy and sell NFTs?

NFTs are generally bought or resold on trading platforms such as Opensea or Foundation.

What is an NFT Coin?

The “Mint” or strike in French, is the initial process of selling a token. To become a permanent part of the blockchain ledger, these new tokens must be mint. Through this action, the user completes a transaction with their fees to see their token appear firsthand on the blockchain.

What is an NFT airdrop?

An airdrop refers to the free distribution of an NFT to a crypto wallet address.

How to store an NFT?

To store an NFT you must have a wallet/cryptowallet. are the most popular Metamask or Rely on wallet.

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