NFTs went crazily popular in 2021 up till early 2022, and a lot of big-time investors jumped on the bandwagon. The technology was revolutionary with an incredibly fascinating long-term potential. It was considered the future of intellectual property. It was the trend, and many people with deep pockets were busy splashing thousands—even millions—of dollars on NFTs, with the assurance that the price would keep soaring.
But the intrinsic value placed on NFTs quickly spiralled down, and many people who bought theirs for over $100,000 are now ready to sell for less than a hundred bucks. In short, no one is talking about NFTs anymore. It begs the question, are NFTs dead?
Well, with the numbers we’re seeing, It seems traders and investors are getting out of NFTs and putting their cash into safer alternatives. I think it’s fair to assume it was an investment in the heat of the moment — perhaps, it was the bandwagon effect: the tendency to do something because everyone else is doing it.
At that time, the prospect looked very appealing. But now, these investors are probably coming back to their senses and pulling out. In short, in the past 30 days, there has been a 25% increase in sales, with the market cap dropping by 40%. With more sales and fewer people willing to buy, the price can only go in one direction: downward.
And when nobody is willing to buy, a commodity tends to go into obscurity. And that’s what’s happening to NFTs today.
That said, some of the world’s most expensive NFTs are still holding the fort. But not very much. For example, the Bored Ape, which sold for $2.9 million in September 2021, sold for just over $130,000 in July and has dropped further to around $100,000. Only an investor with a penchant for making the riskiest investment decisions will buy an expensive NFT at this time.
The economic situation of the world isn’t even helping matters. To combat inflation, the US federal government increased the interest rate and planned to raise it to over 4% by year-end.
When interest rates are higher, investors typically prefer safe investments like bonds and stocks. So they sell off their riskier assets, such as cryptocurrencies and NFTs, and put the money in safer alternatives.
So, for now, I can’t buy an NFT, no matter how cheap or expensive it is until there’s a clear indication that inflation is calming down and NFTs are gaining prominence once more.
NFTs are not dead, at least not entirely. It won’t be surprising for them to emerge again in the near future. But unless the economy changes, I don’t see NFTs rising from underwater. Not even the knowledge of their long-term potential can save them because, for now, no one cares.
– By Anastasia Athanasiadou, Crypto expert, Investor.