Markets

The NFT Bubble Burst: Time to Rethink?

The speculative NFT market is arguably in the worst shape ever, with no traders actively participating in the market. Is the era of trading for profit in NFT over? And do the Web3 community and its companies need to reimagine how they see their digital holdings?

Things have never looked so bad for non-fungible tokens (NFTs). At least when you consider their purchases and sales.

NFT Market is a small part of a year ago

In the past seven days, 190 unique ETH-only NFT wallets have bought or sold, according to data from Dune. Compare that to nearly a year ago when more than 181,000 unique ETH wallets did the same.

source: Dune

Cumulative NFT trading volumes have basically flattened since early June 2022, reflecting a hollowing out of the market. As traders evaporate, holders of premium NFTs are now struggling to exit their positions.

Generally, those who suffer the worst headaches are “collectible” profile pictures (PFP) with little to no interest. In a moment of confusion, the market seemed to have peaked after Paris Hilton appeared on Jimmy Fallon to compare their bored monkeys. Since then, everything has been going downhill.

Learn about the future of Web3 gaming with our handy guide: Blockchain Gaming: The Keys to the Metaverse Castle

However, executives see hope in moving away from generative PFP speculation, toward tokens that provide what other technologies cannot. This year, Ticketmaster took part in NFTs for its events, and NFT ticket alternatives are still raising millions in funding.

The application of NFTs to games or digital identity has long been seen as a growth area for the technology. However, the consensus is forming (if not already formed) that the days of halcyon large scale trading and NFT speculation are over.

NFTs don’t just seem to be on the decline in the long term. (Although the industry outside of speculative digital collectibles looks somewhat better.) According to a new a report By Galaxy Digital, VC investment in crypto is down for the fifth consecutive quarter as money shifts from Web3 to artificial intelligence (AI).

Are games and tickets coming to the rescue?

Modeo Cheng, Principal Game Designer at Curio Research, believes that NFTs will find their niche when they have utility in games.

“Currently, a large portion of NFTs are used primarily for speculation. It is unlikely that many will last. However, I envision a future where practical crypto applications that encourage cross-chain interactions can significantly increase their value.”

Brian D. Evans, CEO and founder of BDE Ventures, a Web3 studio and consulting firm, was surprised that the crash occurred during a period of relative health for other cryptocurrencies.

“As fungibles such as Bitcoin, Ethereum, Solana, and others go up, NFTs go in the opposite direction,” he notes.

Although Evans, unlike many other observers, believes PFP projects are stalled but not run out. Evans has said openly that he does not believe PFP NFTs are a thing of the past.

“What will likely happen is that as fungible currencies continue to rise, people will make profits and then recycle the new capital along the risk curve. That will likely mean more money flowing into new, robust PFP projects in the future,” Evans said.

But this will not happen overnight.

The publication The NFT Bubble Burst: Time to Rethink? First appeared on BeInCrypto.

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