Is the NFT market already dead?

Non-Fungible Tokens (NFTs) are digital assets that have a unique identifier and metadata that is nearly impossible to replicate. NFT technology has a major impact on the business, sports and art industries.

For example, companies such as GameStop, Adidas and Disney have launched and sold digital goods in the form of NFTs. Teams such as Manchester United and Formula 1 teams Alpine and RedBull have also ventured into this industry.

Most importantly, artists have used NFTs to reach new heights in the industry. Today, some successful artists have made millions of dollars minting NFTs. However, there are signs that the industry has some weaknesses. In this article, we explain how the NFT industry is doing and whether the market is dead.

The NFT market

The NFT market is expected to revolutionize the art industry around the world. The NFT market grew to over $25 billion by 2021 as demand for tokens increased. Another estimate from Chainalysis says the volume is even over $40 billion.

This growth has been fueled by the popularity of popular NFT collections such as Bored Ape Yacht Club, CloneX and Moonbirds.

Most of these NFT transactions took place on leading platforms such as OpenSea, Rarible and Mintable.

In 2022, the cryptocurrency collapse had a big impact on the NFT market. According to Chainalysis, the volume of NFTs sold in 2022 has surpassed the volume of NFTs sold in 2021. The report estimates that the volume of NFTs sold between January and August was over $42 billion.

However, there are signs that the 2021 hype has stalled. Data collected by Cryptoslam shows that all chains such as Ethereum, Solana and Immutable X have seen their volume drop in recent months. For example, the amount of NFTs sold in Ethereum was $483 million in August 2022, down from $3.7 billion in January.

At the same time, companies in the sector have started to adapt their activities. For example, OpenSea, the largest company in the industry, laid off 20% of its employees. At the announcement, the CEO lamented that the NFT industry was going through a winter season.

There are different ways to invest in NFTs.

First, one can buy NFTs directly and sell them at a profit. Second, one can invest in tokens from platforms that offer solutions for the NFT industry, such as Immutable X, Enjin Coin and Flow.

Another option is to invest in the native tokens issued by popular NFT and GameFi companies like Sandbox, Decentraland and Bored Ape Yacht Club (which recently launched ApeCoin, their own cryptocurrency), and later sell them for a profit.

In both cases, you can earn money manually or with automated tools. There are many NFT bots for buying and selling NFTs such as SolanaBots, NiftyBot and OpencBot. On the other hand, for trading NFT tokens, there are automated trading robots like NFT Profit.

Will the NFT market recover?

Opinions on the future of NFTs are divided. On the one hand, some analysts believe the industry will continue to grow as it becomes more mainstream. They note that NFTs are safe and disrupt the art market, which is estimated to be worth over $65 billion.

At the same time, some analysts assume that the NFT market will shrink significantly in the coming years. They point out that most NFTs have no intrinsic value and that many people who buy them often realize a loss when they sell them. For example, Jack Dorsey, the founder of Twitter, sold his first tweet for $2.9 million in 2020. In 2022, the same tweet was sold for just $14,000.

Analysts taking an intermediate position note that the NFT industry will exist, albeit on a smaller scale. For example, they point out that NFTs have a valid use case in industries like the metaverse and gaming. The metaverse is an industry where people interact with each other in a virtual universe.

Trading some NFT commodities makes sense in this industry. For example, blockchain projects like Decentraland and Sandbox have created virtual worlds where people can buy virtual property in the form of NFTs. You can also hold virtual events where NFTs are traded.

NFTs will also do well in the gaming industry. Today, gaming companies generate billions of dollars from microtransactions every year. Therefore, several large gaming companies will adopt these NFTs in the future. NFTs will also find applications in industries such as entertainment and fashion.

What’s next?

NFTs have gone through a cycle that most innovations go through. In the initial phase, most values ​​rise sharply amid the hype, only to experience a major correction afterwards. For example, most technology companies crashed during the dot-com bubble, but many others thrived afterward. The same thing happened in the early days of cryptocurrencies. Therefore, we believe that the NFT industry will undergo a major transformation and thus remain relevant in the future.

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