NFTs
Can NFTs make a comeback? Not until traders feel rich again, says an analyst – DL News
- NFTs are stuck in a brutal bear market.
- The launch of the Ethereum ETF could reignite interest, an analyst said.
- Collectors are still buying some high-end NFTs.
In 2024, there is little love left for NFTs.
Popular collections like Yuga Lab’s Bored Ape Yacht Club now costs less than before the NFT craze began three years ago.
Even CryptoPunks, the leading NFT collection with a market value of around US$874 millionthey seem trapped in a brutal bear market.
The situation will not change until crypto traders feel rich again, said Nicolas Lallement, co-founder of NFT data platform NFT Price Floor. DL News.
He said capital “will likely pivot to bluechip NFTs” if the launch of spot Ethereum exchange traded funds triggers a demonstration later this year.
Bluechip is a stock market term for the most reliable and valuable companies on the market.
In crypto, traders use the word to describe tokens or NFTs that they consider to have established value.
In essence, Lallement is alluding to a repeat of the market conditions associated with the first NFT bull run.
Join the community to receive our latest stories and updates
Demand for NFTs soared in late 2021 after Bitcoin rose around 1,140% in the previous year.
With large amounts of newly created capital circulating, many of those who made money piled into NFTs to show off their wealth.
“Ultimately, NFTs act as status symbols,” Lallement said.
Market dilution
There is no guarantee that money from a market-wide rally will flow specifically into NFTs, let alone those that were previously popular.
“We now have NFTs on Bitcoin, Solana and Ethereum L2s, so the market is not just focused on Ethereum like it used to be,” said Lallement.
It’s not just the latest NFTs that are diluting the market.
“These days, everyone is busy with memecoins and DeFi, especially now that celebrities are also participating in it,” said Mahan Fathi, CEO of NFT analytics site NFT Valuations. DL Newsadding that he doesn’t see much liquidity flowing into NFTs.
Many traders have previously used NFTs as vehicles for speculative trading.
The low liquidity of NFTs makes them extremely volatile, creating conditions for huge gains — or total losses.
Memecoins, little-used cryptocurrencies that trade solely based on their popularity, have supplanted NFTs as the asset of choice for traders seeking high-risk bets.
Memecoins based on presidential candidatescelebrities and even comic book artist Matt Furie Pepê the Frog character have taken over the market in recent months.
Pockets of activity
Despite the negative sentiment toward NFTs, there are sophisticated collectors who are still allocating, Fathi said.
In February, a full set of Autoglyphs NFTs were sold for US$14.5 million. Autoglyphs are among the first generative art NFTs created on the Ethereum network.
Then in April, a rare alien, CryptoPunk, was sold for US$12.5 million. Alien Punks are highly coveted because only nine out of 10,000 strong collections feature this feature.
Still, these sales are dwarfed by those of the previous NFT bull market. In February 2022, another alien CryptoPunk was sold for a record $24 million.
There is also the question of whether these sales have any influence on the broader demand for NFTs.
Lallement says yes.
“I expect a ripple effect from these high-end NFTs to more accessible ones at some point,” he said.
Tim Craig is DeFi correspondent for DL News in Edinburgh. Contact him with tips at tim@dlnews.com.