It is about a month ago that FAZ warned of a big bubble in the NFT market. According to Michael Every, Rabobank’s Asia-Pacific expert, the industry is facing “bubble stupidity”. A non-fungible token, which can be abbreviated to NFT, could even be compared to buying a lottery ticket. Wealth can hardly be built sustainably with this, also because the bubble will “surely” burst.
Buy NFT Token: Outliers make exclamation points on Bear Market
The cryptocurrencies, which according to the FAZ are particularly appealing to young people, have confirmed the prediction at least the last few days. All major NFT coins fell sharply in value during the week. TETHA has fallen about 16%, Tezos has fallen almost a third of its original price, and exotic coins like Wilder World (WILD) are falling almost 40% on the annual chart. Taking into account the market value of the digital currencies, a loss of billions can be expected.
In light of the carnage, all kinds of investors should wonder if they should still buy NFT Art. In the following analysis, we would like to take a closer look at this high-risk investment product. The large outliers in the market for non-fungible tokens show that there are still many opportunities in the industry. Ecomi (OMI) has risen by almost half over the past week. GALA set an example with a price doubling (encryption scene reported), and the coins from Lukso (+ 12.52%) and WEMIX (+ 60.57%) also received the industry trend.
What is an NFT?
But how do you recognize NFTs with potential? To get to the bottom of this question, a little basic knowledge is required. Non-fungible tokens serve digital goods as a kind of certificate confirming the authenticity and ownership of the goods. The blockchain contains this information, which is transparent for all to see. All transactions, ie the purchase and sale of a digital work of art, are recorded in this way.
Since the digitized object is associated with only one token, it is unique in all cases. It can be reproducible visually or on a code basis, but at the crypto level it retains an identity and cannot be blindly copied. The original is anchored in blockchain. It is this feature that attracts collectors in the NFT art market. According to OpenSea, the world’s largest trading platform for digital NFT works of art, NFTs worth a total of $ 1.9 billion were traded in August alone. Those who want to buy NFT art can now do so in a wide variety of areas. Sports, art and media make use of the new technology.
Certain works of art are actually traded very actively. Want an example? A cartoon image of a monkey recently sold for a full 39 Ether. The seller made a profit of about $ 60,000 on this deal, after all having bought the artwork just two weeks earlier for “only” 22.5 ETH.
Another type of NFT reaches a value in millions in a very short time. DeFi apps analytics platform DappRadar has reported an incredible 65 NFT works of art that have changed hands for over $ 1 million in the last 30 days. A month earlier, there had been only 32 NFT sales worth millions. CryptoPunk # 8857 currently occupies the top spot with a value of about $ 6.64 or 2,000 ETH expressed in Ether.
What is an NFT token?
What are non-fungible tokens? Now NFT Art can not be equated with an NFT token. After all, cryptocurrency is not in itself a work of art, but rather acts as an infrastructure for marketplaces in images, media or other digital goods. So how does the NFT award arise? The principle of supply and demand applies here. Often these are special projects or up-and-coming start-ups that release their own cryptocurrencies in order to use them for their own business.
– Galaspil (@GoGalaGames) September 13, 2021
Let’s stay with the aforementioned NFT track outrigger GALA. The token is issued by Gala Games, a company that has been involved in gaming since 2019 and already boasts a community of around 1.3 million active monthly users thanks to exciting content. Gala Games already claims to have sold 26,000 NFTs. This is the content of the games themselves, which is part of the virtual world for the users. The most expensive GALA NFT is said to be worth three million US dollars.
This example should make it clear that the NFT award has nothing to do with the value of the individual work of art. Nevertheless, increased demand for the cryptocurrency usually leads to rising prices of the NFT type as well as increased prices on the token. It should not be forgotten that investors also have a finger in the pie. It is up to the investor to decide whether they act as collectors to buy the digital art cheaply and sell it at a higher price, or whether they simply act as crypto traders. There are undoubtedly risks in both areas.
Conclusion: Buy NFT Art now?
We have shown that the digital works of art are not directly related to the price of their cryptocurrencies. However, due to the well-known market principle of supply and demand, there are obviously clear implications when certain coins are able to trend.
While the price of NFT tokens is set on the stock exchange, NFT Art can be purchased at alternative marketplaces that specialize in digital artwork. Auctions often take place in this context.
Investors need to keep in mind that there are always risks. Those who have bought their non-fungible artwork at a high price and then cannot get rid of it are stuck with the losses. The same, of course, applies to any collector, be it stamps or rare whiskeys. With these established collectibles, a much more stable market can be identified.
As the NFT market is currently proving, ordinary crypto traders are also repeatedly threatened by severe cuts. The total loss of the system is also conceivable in case of insolvency of a crypto development team. However, the industry is shaken from time to time and has always recovered from phases with strong profits. Already invested investors should consider this before rushing to sell their NFT tokens.