Party is over: Crisis on NFT market

The first tweet in NFT form brought in $2.9 million for its creator, Twitter inventor Jack Dorsey. That was in March last year. The same NFT is up for sale again, current high bid: $133. No sign of a heat wave, the mood on the NFT market is at freezing point. And the cooling was sorely needed.

NFT market mood hole

Bear market, crisis, crash: Whatever you call it, the crypto market has seen rosier times. BTC continues to struggle at the 20,000 mark, ETH slips suspiciously near $1,000, with a third remaining from a record high of $3 trillion in total market cap. The Ukraine war, inflation and energy shortages have left their mark on the financial markets, and the crypto risk game has had to lose feathers in particular.

And the NFT market? A similar overall picture: in the record month of January, the trading volume was still 17 billion US dollars. Last month: $1 billion. In July, the trading volume on all marketplaces could slip below the one billion US dollar mark for the first time in a year.

“Definitely Not Dead”

Sobering numbers, cause for concern? Not at all, says Gopi Kannappan, Chief Product Officer at NFT startup bitsCrunch, to BTC-ECHO. “The volume of the NFT market has definitely slowed down in June 2022, but this is largely due to global economic factors and not an isolated problem of the NFT market,” the expert said. “Other metrics such as developer activity and the number of new users in the NFT ecosystem have grown steadily even under the difficult global economic conditions.”

The NFT market is “dynamic” but “definitely not dead”. It’s all a matter of perspective: “If we zoom out and look at quarterly trading volume, we see that Q2-2022 trading volume exceeded Q4-2021 by four percent on ETH.” At the same time, “all other global financial markets recorded negative growth”.

Those declared dead live longer

What can be observed on the NFT market is not so much the gradual end of a technology. It is the bursting of a bubble inflated by speculators. As it turns out, not everyone seems convinced that the cultural-historical status of the first tweet is comparable to the Mona Lisa, as its buyer, Sina Estavi, gushed at the time.

This isn’t just a tweet! I think years later people will see the true value of that tweet, like the painting of the Mona Lisa.

Sina Estavi, Bridge Oracle CEO, acquired the first tweet as an NFT in March 2021

Away from the bling-bling hyped meme pictures and create space for down-to-earth projects – the NFT identity crisis could also be an opportunity. Art, Web3, Metaverse: the possible applications for NFTs are not diminishing, on the contrary. The technology fulfills many bridging functions in digitization. NFTs seem to be anchoring themselves in the mainstream even faster than cryptocurrencies. The social media world around Instagram, Twitter and Meta, formerly Facebook, has long been trying to integrate them.

However, the oversupply is also fatal for the market, at least when NFTs are sold as an investment. They’re not, at least not in bulk. There is no lack of growth potential and opportunities to use NFTs sensibly. Do tweets count? Questionable.