On Sunday, a total of $ 52 million worth of unchanged tokens were traded on OpenSea, the largest market for these items. This is the forum’s slowest single day since December and it’s a big change from April when trading volumes rarely went below $ 100 million.
If demand declines, the price of NFT will fall very rapidly. Starting at $ 400,000 each in April, the Bored Ape Yacht Club NFT is now available for $ 200,000. Similar price reductions have taken place at other expensive museums. The Pixelated Moonbirds entrance fee has dropped from as high as $ 110,000 in April to $ 45,000, while Reese Witherspoon’s World of Women’s fee has dropped from $ 34,000 to $ 10,000.
Along with bitcoin and ether, the value of NFTs is also declining. Bitcoin fell below $ 28,000 for the first time since 2020 on Wednesday and ether fell close to $ 2,000, which is far from its peak at $ 4,600 in November. Web3 is not happy right now.
The Wall Street Journal reported last week that sales of inverted tokens (NFTs) were on a “flat line” and cited a sharp drop in the number of purchased NFTs, while Yahoo wondered whether the $ 140,000 sale of CryptoPunk purchased six months earlier for 1 million dollars. marked “end of NFT.” This has led to another kind of happiness: competitors who predict that NFTs will soon disappear.
There’s a little confirmation bias going on here. People say that the reduction in the number of purchased NFT devices is proof of a collapse, but they do not realize that money has been transferred to some expensive NFT instead of being distributed to thousands cheaper. In April, investors spent $ 400,000 on a single Bored Ape instead of buying 100 separate NFTs for $ 4,000.
Some NFT machines that were bought for a high price a few months ago and then sold for a small amount of that price are also misleading. Because NFTs are volatile, capital moves rapidly from one development to another. Admittedly, the first tweet of Jack Dorsey, the founder of Twitter, sold for $ 2.9 million a year ago and was auctioned off in mid-April for $ 280. Does this mean that NFTs do not work? Probably not in the same week that merchants paid $ 76 million for pixelated owls at Moonbirds’ general sale.
People hate NFT because most of them are bad for the environment and are mostly used by famous and cryptic people to show off their wealth. But if you hate something, you may be too quick to believe that it is dead.
To say that the NFT market is in great shape right now would be a lie. NFTs are truly difficult. But claims that the NFT is dead do not take into account the fact that the economy as a whole is also in trouble.
There are two news stories about how the market is getting worse. First, on May 4, the Central Bank raised interest rates by 0.5%, the highest in 20 years. The monthly consumer price index of the Directorate of Labor, which was published on Wednesday, is a way of measuring inflation. A fall in inflation is not enough to convince investors that interest rates will not rise again any time soon.
If NFTs were up, they would almost certainly be the only ones up. Over the past month, the Nasdaq stock index has fallen by 20%. Apple and Amazon stock prices have fallen 12.5% and 30%, respectively, since the same day last month. IT companies are not the only ones experiencing the strain; most customer-facing companies are too. Over the past 30 days, Disney’s shares have fallen 19.5%, while WWE has reported a record quarterly profit, but still loses money every month. Nike was down 13.5 percent, Adidas was down 10 percent and Gucci’s company Kering was down 13 percent.
With a 50% price reduction, The Bored Ape Yacht Club is now in the same division as Netflix. In the last 30 days, the share price of the streaming giant has fallen by half. This is because it has lost members for the first time.
What goes up must come down. DappRadar says that the market for NFTs has grown by almost 2,500% in 2021 when $ 25 billion was spent on them instead of $ 94 million. Almost no one would disagree that speculation has caused an NFT bubble, but there are many different views on how big this bubble is.
But you could say the same thing about some companies, where stock prices rose during a pandemic. In July 2016, Amazon’s stock price reached $ 3,777, which was twice what it was for COVID. Over the past two years, stock prices in Apple, Netflix and Meta have all quadrupled while Tesla’s peak was fourteen times the lowest.
The numbers are rising. The number decreases.
NFTs still exist
The future meta-site Otherside, made by the same people who created the Bored Ape Yacht Club, Yuga Labs, shows how NFTs have changed in several ways. Yuga Labs issued NFT shares to Otherside on April 30, and since then, nearly $ 1 billion has been spent on virtual land.
It’s hard to say that NFTs are gone when the biggest trading day in history took place just two weeks ago.
However, the debut revealed some weaknesses of cryptocurrency, leading to the decline of the market. Because Ethereum is not very good, merchants spent about $ 200 million on transaction fees, including thousands of dollars in unsuccessful purchases. Ether’s deflation system burns these “gas” charges, which wipe out many days of market activity.
However, the forthcoming metaverse draws attention to the evolution of NFTs. NFT devices are most commonly used as digital status symbols, but Yuga Labs wants Bored Ape to become a popular AAA game. Dozens of NFT developers are trying to sail from OpenSea to the living room. How well some perform will be a better indication of the long-term health of NFTs than a decline caused by a rise in interest rates, which has hurt most other indices.
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