Why the powerful forces driving the declining NFT market will not let prices collapse yet |  Artnet news

Why the powerful forces driving the declining NFT market will not let prices collapse yet | Artnet news – Mail Bonus

Is the honeymoon over for NFT?

The market for these digital assets, which was launched throughout 2021, is now showing signs of cooling. But it may not be collapsing as much as some reports required.

Purchases and sales of NFT computers began to decline in the first quarter of this year, declining from $ 3.9 billion in weekly trading on February 13 to $ 964 million in March 13 – the lowest week since last summer. according to blockchain analytics company Chainalysis.

Other clues: Since Coinbase launched its NFT marketplace on May 4, NFT trades on the site has been reluctant. The platform, which is still in beta, has only recorded 1,013 sales worth a total of 148 ETH ($ 340,000) in the past week to a tiny group of 1,200 users, says Dune Analytics. This is after millions of people signed up for the project’s waiting list when it was announced this autumn.

Trading on OpenSea, the largest NFT market, also seems to be slowing down. According to Dune, the number of active monthly traders on the platform in March was the lowest it has been since June 2021, with less than 245,000 users. Compare that to January, when the platform saw 546,000 users.

While it is not difficult to find statistics related to the NFT market, it is difficult to interpret the numbers or know who to trust. Especially because the laundry business – the practice of users buying and selling themselves the same item as a way to inflate numbers artificially – is widespread among cryptocurrencies and NFT systems.

And it’s easily done. “Many NFT trading platforms allow users to do business by simply linking their wallet to the platform, without having to identify themselves,” said Chainalysis in February report which made the national news.

Yuga Labs LLC, 101 Bored Ape Yacht Club (estimated at 2021). With Sotheby’s permission.

At the end of April, the NFT market received a much-needed boost when the Bored Ape Yacht Club launched its Otherside project, an online multiplayer game where users can turn their NFT games into playable characters.

Within hours, 55,000 NFTs associated with virtualdeeds called “Otherdeeds” were sold in a bargain that increased transaction costs – known as “gas” charges – on Ethereum to what has not been seen since September 2020. Some people were said to have paid 14,000 dollars, double the cost of the land itself.

Although sales have raised the price of Bored Ape Yacht Club-related NFTs, the joy was short-lived. The price of the newly created Apecoin token – used to buy Otherdeeds – has since fallen below $ 8, down 70 percent from its April high of almost $ 27.

And the floor price – the lowest amount you can spend to buy a particular NFT brand – for some major projects has dropped over the past week.

After reaching 152 ETH ($ 330,000) on April 30, the cheapest Bored Ape has dropped to 93 ETH ($ 214,000), according to NFT Floor prices. Bored Apes floor prices have fallen by 22 percent over the past seven days, CryptoPunks has fallen by 14 percent and Moonbirds has fallen by 30 percent.

Lack of insight

It is difficult to get an accurate pulse on NFT markets. Reports tend to be inconsistent. Some say the market is smooth; others argue that it is stabilizing.

The problem is that most of the data on NFT comes from the systems themselves and there is no way to know how much of it is fake. “We can not say how much of the NFT market is real and not just promotional – or if anyone is real,” said David Gerard, cryptographer and author of the book. Attack on a 50-foot Blockchainsaid Artnet News.

For example, the majority of transactions Appearance RareLaunched in January, the NFT marketplace, which quickly grew in popularity to challenge Opensea, proved to be wash business. This data skewed much of the reporting on NFTs early in the year.

Molly White, software designer who runs Web3 is doing just fineA website that records horrors in the cryptocurrency space, Arnet News said that “when platforms describe things as the number of their users, it is not something that can be verified in the chain in the same way that NFT sales can normally be.

This explains why the NFT market sometimes appears to be disconnected from cryptocurrency markets. However, if you step back and look at what’s going on in the crypto space as a whole, it makes sense that NFT functionality would fall off.

Graph of the value of Bitcoin last month.  Screenshot via Google.

A graph of the value of Bitcoin over the past month as of May 12th. Screenshot via Google.

The price of Bitcoin fell below $ 27,000 on Thursday – the lowest price since December 2020 and fell by 60 percent from November which was close to $ 69,000. Meanwhile, Ethereum, the primary cryptocurrency used in the NFT space, has fallen 47 percent since January.

High inflation, coupled with a steady rise in interest rates and an end to stimulus money, means more people are fleeing risky investments such as cryptocurrencies and NFTs and putting money in safe havens such as Series I savings, which the Treasury announced will pay 9.62 percent by the end of October.

But the NFT market may not disappear so easily. Venture capitalists like Andreessen Horowitz have invested heavily in the space and have a vested interest in keeping it going. Yuga Labs, the company behind the Bored Ape Yacht Club project, is valued at $ 4 billion; OpenSea has $ 13.3 billion. Securities companies will probably try to keep the market afloat for as long as possible, even if it means throwing good money after bad.

So, have markets really collapsed? “I’m not convinced they’ve ever crashed,” Gerard said. “Maybe VCs are just getting tired of pumping these things.

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