Cryptoverse: The bonfire of the NFTs

Non-fungible tokens (NFTs) displayed on the NFT Marketplace OpenSea website can be viewed through a magnifying glass. This illustration was taken on February 28, 2022. REUTERS / Florence Lo / Illustration

July 5 (Reuters)-NFT’s dream isn’t dead, but it’s been hit hard by irreplaceable.

The market was shining brightly last year as crypto-rich speculators spent billions of dollars on risky assets, pushing up prices and profits. Now, six months after 2022, it looks ugly.

Monthly sales of OpenSea, the largest NFT market, plummeted to $ 700 million in June, down from $ 2.6 billion in May and far from its January peak of nearly $ 5 billion. ..

By late June, average NFT sales had fallen from $ 1,754 at the end of April to $ 412, according to NonFungible.com, which tracks Ethereum and Ronin blockchain sales.

Gauthier Zuppinger, co-founder of NonFungible.com, said:

“We’ve seen a lot of speculation and a lot of hype about this kind of asset,” he added. “Now we see some decline just because we realize that people aren’t millionaires in two days.”

The NFT market collapsed with the cryptocurrencies normally used to pay for assets when central banks raised interest rates to combat inflation and their desire for risk diminished.

Bitcoin decreased by about 57% in 6 months of the year, while ether decreased by 71%.

Dip or death spiral?

For critics, Crash confirms the stupidity of buying tradable blockchain-based records linked to digital files such as assets, images and videos, and often artwork. read more

A Malaysian businessman who bought Jack Dorsey’s first tweet NFT for $ 2.5 million last year struggled to bid over $ thousands when trying to resell it in April. read more

However, Benoit Bosc, Global Head of Products for crypto trading company GSR, sees the recession as a great opportunity to build a company’s NFT collection.

Last month, GSR spent $ 500,000 on what Bosc calls the “excellent” collection, the NFT (a large online fan-based collection).

His purchase includes a set of 10,000 cartoon monkeys created by NFT from Bored Ape Yacht Club, US-based company Yuga Labs and promoted by Paris Hilton, Jimmy Fallon and others.

The hype surrounding boring monkeys raised $ 285 million in April by selling tokens that Yuga Labs could redeem for boring monkey-themed virtual world lands that haven’t been launched yet. is. read more

However, according to market tracker CryptoSlam, the average selling price of Bored Ape fell to about $ 110,000 in June, halving from its January peak of $ 238,000.

Bossk has set up three screens in its New York office to display NFTs. This includes a variety of pixelated characters and boring monkeys purchased for $ 125,000.

“For us, it’s also a brand movement,” Bossk said. He said that owning a valuable NFT and using it as a profile picture on social media is a way to establish “respect, authority and influence” in the field of cryptocurrencies.

Game over? Game Start?

Nonetheless, the future of NFTs is clearly uncertain as the era of low interest rates, which encouraged investors to place high-risk bets, is coming to an end.

Some market watchers have stated that the impact of NFTs on the art market will diminish. On the other hand, while the big vision for the blockchain-based Metaverse hasn’t come true yet, enthusiastic fans expect NFTs to rock the gaming industry. For example, allowing players to own in-game assets such as avatar skins. read more

Modesta Masoit, Chief Financial Officer of blockchain tracker DappRadar, said:

However, this dangerous combination of gaming and financial speculation can face challenges. According to John Egan, CEO of technology research firm L’Atelier, most gamers prefer games that don’t include NFTs or “play to earning” components.

While most of the breakthrough new crypto regulations agreed by the European Union last week excluded NFTs, Spain is trying to individually limit how video games sell virtual assets for real money. read more

Meanwhile, Axie Infinity, the largest NFT-based game, has in-game tokens collapsed from last year’s peak of 36 cents to less than 0.5 cents.

For L’Atelier’s Egan, it is unlikely that the NFT market will recover in its current form.

“After all, it’s a situation where you’re paying a lot of money for very limited assets that don’t really generate cash flow,” he said.

However, he said, the basic notion of creating your own digital assets is still “basically important” and will bring “massive applications” to the financial sector in the future.

Report by Elizabeth Howcroft; Edited by Pravin Char

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