Earlier this year the NFT frenzy took the art world by storm, yet, just a few short lucrative months later, it seems the bubble is ready to burst.
A recent report on the crypto news site Protos gained much attention claiming the NFT market “imploded” in May “with sales in every single category almost entirely drying up.”
Is this really the case? Is the NFT party over before it has even begun?
Since bursting onto the scene this year non-fungible tokens have dominated the art and collector worlds with record-shattering multi-million dollar sales. In March, a digital artwork by the graphic designer Beeple, real name is Mike Winkelmann, sold at a Christie’s auction for a record $69 million. Later the same month Jack Dorsey, CEO of Twitter, sold his first tweet as an NFT for $2.9 million.
But new data from Nonfungible suggests the NFT hype may be fading. Overall sales plummeted from a seven-day peak of $176 million on May 9, to just $8.7 million on June 15, placing volumes roughly back where they were at the start of the year.
Similarly, the prices of major NFTs also appear to be falling. SuperRare digital art prices fell on average from a record of $31,778 in May to $5,342 just a month later and, in a similar timespan, one of the most popular NFT projects, Cryptopunks slid from a weekly average of $99,720 to $50,840.
However, whilst NFT sales are dropping, the market hasn’t necessarily imploded just yet, in fact many industry insiders still see a future for digital collectibles.
Gauthier Zuppinger, the co-founder of Nonfungible.com commented “This article definitely tried to take down the NFT space, through the revelation of a hypothetical bubble burst,” also explaining “The thing is that, each time you’ll notice such a quick increase on any trend, you’ll see a relative decrease, which basically stands for a market stabilization,”
All that being said, the NFT market definitely appears to be cooling off, just not to the dramatic extent that Protos reports, but what is next for NFTs?
Advocates don’t see the recent slowdown as the death knell for the NFT market. “By definition, markets for speculative assets are unstable and liable to dry up” commented Nadya Ivanova, CEO of the research firm L’Atelier, “High-profile NFTs selling for millions of dollars was a sure sign that the market was treating them as speculative assets,”
“The bigger question for NFTs is their long-term value, which we believe is likely significant,” she added. According to Geoff Osler we are more likely to hear about other potential use of NFTs in the months ahead, for example, music. “We have only seen the tiniest part of where this is going,” commented the CEO and co-founder of NFT app S!NG, “Cryptocurrency is here to stay — and NFTs mean there is now something to buy. It’s the other side of the equation. And this is going to go a long way past digital art. We think music is next.”
Artists such as Kings of Leon and Steve Aoki, for example, have already jumped into the NFT frenzy, but the potential for NFTs doesn’t end there, the function of having an immutable record of ownership or agreement minted onto a blockchain has such rich potential to impact so many industries.
For example, when purchasing a home, rather than the exhausting process of paperwork and communication (or lack of!) between you and expensive conveyancing lawyers, an NFT token could simply be exchanged from the seller to the buyer and registered on a blockchain.
Similarly, renting a property, opening a bank account, purchasing a car or any other process that requires certified paperwork, even the ownership of tangible goods such as a pushbike or a watch could all be verified as NFTs.
At the moment when people are spending vast amounts on memes when they could simply right-click and “save as” to make a copy, NFTs may seem like a novelty idea to many, but with so many potential use cases, are they missing the true value that NFTs have to offer?
This article was written by Lee Mockler for The London Crypto Exchange.