All markets tend to behave cyclically, without exception. And the NFT market seems to be proving this theory.
From pixelated paintings and tokenized tweets to true masterpieces that take years of hard work to complete, it seems that the hype for NFTs is fading away after a significant initial hype. Data from Nonfungible.com shows that the average price of these tokens has declined 70% from the ATH in February 2021.
Currently, the average price per NFT on the market is approximately $1.4K when just a month ago, the average was as high as $4.3K.
A Global NFT Market Crash? It All Depends
While the data is irrefutable, interpretations always have some degree of flexibility. NFTs have undoubtedly achieved amazing revaluations since the launch of the ERC-721 standard. However, attempting to stereotype them all as the same group for a given statistic can be difficult and perhaps impossible.
It seems just as complicated to put a Cryptopunk and Beeple’s artwork in the same category as NFTs, just as it is to talk about the average price of a “cryptocurrency token.” and put Bitcoin and Piranha Coins on the same group. Unlike fungible tokens for which there is already a limited supply determined by their code, NFTs are unique or extremely limited. But there is no exact way to account for how many NFTs are there since anyone could create an NFT at any time and offer it for sale on a marketplace.
And generally, the business is not in the creation but the resale of NFTs. Something similar happens with many collectibles such as baseball cards or even art in general. When a particular artist dies, his or her works tend to increase in value because the number of pieces in circulation will no longer increase.
What Goes Up, Also Goes Down
In the world of NFTs, it seems that speculators are suffering a hangover after the party of Q1 2021. The first NFTs went from near zero or cheap value to achieving appreciations of several orders of magnitude.
For example, the Reflection by xCopy token first sold in October 2018 on Rarible for $203 went on to resell for $98K two weeks ago, and its buyer managed to sell it for $877K on March 31, 2021.
However, most NFTs do not meet the same fate. For example, Cryptounk Number 8282 initially sold for $102 and from there trading owners until someone bought it for $105 only to resell it for over $74K a few days later. But since then, the unfortunate buyer failed to get a return on his investment and ended up selling it for $57K after a month of auctions.
The NFT situation has been described as a bubble and silent crash by experts and analysts. In fact, Beeple – the artist who sold the most expensive NFT in history – is convinced that the whole NFT phenomenon is a bubble. However, some have a more optimistic view of the situation and expect the markets to calm down after an initial rush due to public overexposure to this novel product.
With #nft becoming more and more dominant, the world of art seems to be reborn again and moving to never expected directions. I am so grateful to be part of this revolution.
Let’s give voice to all the #nftart even in the most remote part of the planet. 🍭⭐️ Who’s with me?
— Mila Lolli (@milalolli) April 4, 2021
The NFT industry is still tiny, but the case is quite similar to Bitcoin and other cryptos. As it starts to gain traction and prove its importance, the fluctuations in price will keep happening. However, some believe that even without a speculative component, NFTs are here to stay.
To know more about NFTs, click here. CryptoPotato has a guide with everything you need to know about this technology.