Cryptocrisis: NFTs and cryptocurrencies lose value, lose popularity

The collapsing stock market prices do not stop at the NFT and crypto sector either: Average NFT sales have been declining since April 2022, while the value of Bitcoin and Co. falling. Does this mean the end of the crypto bubble?

A report by the Wall Street Journal paints a grim picture for trading in NFTs: NFT sales fell to an average of 19,000 sales a day on the week of May 2, 2022 – a drop of just over 92 percent from the previous high of 225,000 daily sales in September 2021.

On the way down

This trend has been uninterrupted since then: According to the overview of the NFT tracking platform nonfungible.com, the number of NFT sales has continued to decline almost continuously since the second week of May.

Digital certificates are referred to as NFTs, which prove the authenticity of a digital asset attached to it, and which prove the purchase of those assets. NFTs can be any type of digital content offered for purchase.

Purses as an indication

NFTs are closely related to cryptocurrencies like Bitcoin or Eth, as NFT technology is based on the idea of ​​blockchain, which in turn makes cryptocurrencies possible.

In this regard, The Wall Street Journal reports the collapse of another indicator of NFT’s popularity, namely the number of active wallets. Wallets are software tools that users use to manage their cryptocurrencies.

So lower use of these wallets is an indication of lower interest in cryptocurrencies and therefore also in NFTs.

Uncertainty in technology

In particular, the Wall Street Journal sees the reason for the declining NFT hype in rising interest rates, which make particularly speculative investments such as cryptocurrencies less attractive. The value of Bitcoin has also fallen sharply.

This development can not only be observed in this sector; it affects much more a large part of the tech sector. The NASDAQ Composite Index, which is strongly influenced by technology companies, has been declining since April – investors are currently investing quite defensively.

Speculative

According to investment firm Morgan Stanley, another reason for the declining interest in NFTs and the associated fall in prices is that actual demand is currently lagging behind expectations driven by speculation.

The investments in NFTs were made with the idea that another person would buy the acquired assets for an increased amount – a hope that has not yet been fulfilled.

depreciation

This is especially to be experienced by people who have themselves invested in NFTs and are now trying to sell them on.

For example, the buyer who bought an NFT from Twitter co-founder Jack Dorsey’s first ever tweet for $ 2.9 million could not resell it: the highest bid for the NFT was only $ 270.

Is it all just exaggeration?

While social media is already talking about the “death of the NFT” in terms of this development, at the same time, more and more voices are considering such a verdict as premature.

For example, CNET sees the declining prices in the context of the general sentiment in the stock markets already described, and states that the trend is not only affecting NFTs. Moreover, such sharp fluctuations are by no means unusual in a still young market, the portal further notes.

End or new beginning?

The Wall Street Journal also states that this development does not necessarily mean “death” for NFTs in general, but may also be an indication of their further development: it is possible that the current crash is only the end of purely speculative assets (f. eg such as the cartoon characters “Bored Ape Yacht Club”.

On the other hand, value-added NFTs can continue to exist or even regain popularity. The Wall Street Journal understands that NFTs are not only linked to a digital work of art as a certificate of authenticity, but also promise exclusive access to a movie or make it possible to meet a band backstage.

Leave a Comment