We do not stand a chance against NFTs in video games

While a large number of development studies find NFTs really, really good, many more players are rightly concerned about how monetary the gaming world is actually going to become. The large NFT price drop a few weeks ago therefore benefited many people, and there is hope that the digital tokens are finally over. Well, say what you will about NFTs, and the question of their raison d’être is certainly not unfounded, but one thing is clear: they will not cease to exist in the near future. On the contrary, the “danger” of renewed hype is extremely realistic.

The downward trend described for NFTs is nothing more than the reaction to the cryptocurrency – the collapse of cryptocurrencies – which in turn is a result of the current global economic uncertainty. The reason for this can be summed up simply: When you need money, you sell the most insecure object with the biggest price fluctuations. And Bitcoins are right at the top of this list.

NFT price drop | OPINION | reason for hope?

However, one should not fall under the misconception that there are many individuals who have all had the same idea and sold their digital goods. Instead, up to two-thirds of the so-called Bitcoin trading volume in 2021, according to investment bank Morgan Stanley, was generated by crypto institutions via the Financial Times. These include custodian banks, stock exchanges and cryptocurrencies that trade with each other. This year, the share of institutional investors has risen to around 75 percent, so private investors are playing an increasingly smaller role in the big game of price fluctuations.

Connect cryptocurrency and economics

This is important because the Bitcoin price no longer behaves like an independent capital investment, but is subject to real economic fluctuations. Specifically, this means that Bitcoin is getting closer and closer to the NASDAQ stock index, which not only indexed the 100 largest stocks, but also went down steeply at the same time as the cryptocurrency. And where one cryptocurrency fluctuates, so do the others – in this case Ethereum. This has something to do with NFTs because they are on the respective blockchains of the currencies and they are traded in the corresponding currency. If the value of Ethereum falls, NFT also becomes cheaper, that is, it loses value.

Bored Ape Yacht Club

Source: boredapeyachtclub.com

And because cryptocurrencies, like NFTs, have no real equivalent value and are therefore highly speculative, their price also depends on the overall cryptocurrency picture. This is in so-called Expressed in the form of fear-greed indices, where fear of financial loss is balanced with greed for easy money. The values ​​are calculated based on market events, media analyzes and surveys, where Bitcoin is currently at level 12 out of 100, ie with “extreme fear”, and Etherum with a value of 24 also receives the “fear” rating.

And those who are scared are selling, in this case, their NFTs. And the ensuing downward spiral gives many NFT critics reason to hope the trend is self-extinguishing.

Leave a Comment