The collapse of the value of NFTs and the comment of the CEO of SuperRare

The market value of many NFTs has literally plummeted since their 2021/2022 peaks, but SuperRare’s CEO isn’t having it.

John Crain recently criticized an article that declared NFTs dead, even though he said they are changing completely.

The collapse of the value of NFTs: comments from the CEO of SuperRare

The NFT market exploded during the first part of 2021, coinciding with the first phase of the last major bull run, and for at least a year it was in practically constant growth.

However, it was a speculative bubble and it was not difficult to understand it even then.

With the 2022 crypto bear market, this bubble has burst and the NFT Market practically collapsed.

At the peak in late 2021/early 2022, a first decline had already occurred, but it was after the implosion of the Terra/Luna ecosystem in May two years ago that the real collapse began.

In fact, if the weekly peak of on-chain NFT trading volume occurred in August 2021, with an average of 450 million dollars daily, at the beginning of May 2022 this daily average fell to 265 million.

By October last year, however, that average had fallen even below $10 million, a 98% collapse from its 2021 peak.

However, with the bull run cryptography which began between October and November 2023, there was a peak of recovery.

Just think that in December it had returned to almost touch 75 million dollars. However, even that recovery first slowed and then underwent a correction, so much so that the average daily onchain NFT trades have now dropped to around $32 million.

Are NFTs dead?

The main collapse was experienced by NFTs related to the art market and, in particular, image files.

At its peak, the NFT market saw nearly 200,000 tokens traded per day, with a total daily value of over $191 million.

Since then, there has been a slow decline that has nearly imploded the NFT art market, with declines of over 90%.

For this type of digital content, a market recovery is not being seen, so it is difficult to imagine that for art-related NFTs there could be a significant recovery in the short term.

SuperRare CEO’s Comment on NFT Market Value Collapse

John Crain, CEO of Super rarehowever, he does not agree.

SuperRare is primarily a marketplace for artistic NFTs, and Crain writes on his official X profile that the tons of negativity against NFTs should be reviewed in a more general framework.

He writes:

“People forget that we literally started from scratch six years ago, and two weeks ago on Base there were over 44 million dollars worth of NFTs. NFTs are clearly dead.”

However, he also adds that he believes we will continue to see a shift in this business model.

On the other hand, even the incriminated article suggested a change in the business model.

The change

The problem is that it’s hard to imagine that the current bull market for art NFTs can actually recover.

Instead, it is easier to imagine that the same NFT market could change, addressing new sectors.

The article correctly highlighted that they are not an asset in themselves, but just a way of recording on the blockchain who owns the rights to an asset.

Its main use must be to certify ownership and authenticity, and its main characteristics must be those related to the functionalities of blockchains, such as interoperability, secure transfer and verification.

In short, the real asset is the underlying one, that is, what the non-fungible token represents, and not the NFT itself.

The idea that by buying an NFT you were acquiring an asset that would appreciate over time really has too weak foundations to sustain a market like the one in 2021.

The Real World Asset (RWA)

The next step, however, should be to use NFTs to tokenize real-world assets, with so-called RWA.

The key point is precisely the fact that an NFT actually represents a kind of certificate of ownership, verifiable and non-forgeable.

The difficulty lies in creating a certain and unequivocal connection between a real asset and a token, and for this it will probably be necessary to resort to some certification body, which can hardly be decentralized.

In this way, NFTs can also be linked to the art world, as in theory they could allow the tokenization of real works of art.

If the RWA token market has not yet taken off, it is probably because sufficient guarantees have not yet been provided to ensure that a given token is actually associated with a property right.

When this problem is effectively resolved, the RWA market will truly be ready to take off.

Speculation

Instead, what happened in 2021 is just pure speculation.

A classic speculative bubble simply inflated, in which those who purchased an NFT did so only because they hoped to resell it at a higher price.

This type of bubble is always destined to burst sooner or later, even if, once it bursts, it does not always completely destroy the market.

For example, in the early 2000s, the dot-com bubble, which was a technology company listed on the stock exchange that claimed to do business online, burst. When the bubble burst, many dot-com stocks disappeared from the stock market, but some remained, and a decade later they had returned not only to the levels they had reached during the bubble, but also well beyond.

Amazon shares, for example, went through that speculative bubble, when in a few years its price went from US$0.1 to more than US$5, only to fall back to US$0.3 after the bubble burst, but in less than ten years it returned to $5, and after just over twenty years it reached almost $200.

It is not known how the NFT market will end, but if it evolves following the needs and desires of investors, it could come back even stronger than before, despite the disappearance of many NFTs.

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