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Should-the-Declining-NFT-Sales-Worry-Investors?

source-logo  cryptoknowmics.com 28 May 2022 00:59, UTC

The year 2009 witnessed the birth of a new financial world, the blockchain world. One of the most significant assets in the blockchain space is NFTs. The class of assets got widely adopted in 2021, generating millions, probably billions, for investors. However, some analysts claim that NFT sales are declining, and this space could soon die. Market crashes in 2000 and 2008 are notorious in the financial world. In 2008, investors and homeowners lost billions after an economic recession driven by poor mortgage policies. Will history repeat itself this year?

NFTs, a Mere Bubble?

Since its introduction, many blockchain antagonists have called NFTs 'a mere bubble.' There are many reasons why financial analysts refer to this asset class as a mere bubble. Some of them are as cited below -

A Fast Rise in Popularity and Value

NFTs gained popularity in a brief span in 2021. It is the year that these tokens started to attract the attention of influencers. The famous musician Snoop Dogg showed his interest in the NFT space. KSI also invested some money in different NFTs. Katy Perry, Justin Beiber, and others were also wildly involved. In 2021, the first NFT album was released and sold for millions. There were many cases of investors selling pieces of NFT for million. This sudden popularity is one reason why people call it a bubble.

NFT Sales Reduced

Recent reports about the NFT space indicate that the sales have been reducing. According to reports, when compared to last year's NFT sales, there has been an almost major reduction. Morgan Stanley recently predicted that the NFT market would also crash. There are several reasons argued in Morgan Stanley's reports about the state of the NFT space.

NFT Values Reduced

The owner of the Dorsey First tweet, who bought it for $2.9 million, wants to sell it. But, some reports indicate that he is struggling to sell, with the highest bid standing at $21 thousand, barely 1% of their purchase value.

Many Buy for Speculative Purposes

A Morgan Stanley report indicates that many NFT investors purchase NFTs for speculative purposes. Most NFT investors buy the assets awaiting them to rise in value. This argument can be backed by a report by Chainalysis, which showed that many NFT trades are 'wash trading' activities. NFT owners are trying to force the values to increase.

Crypto is Still Considered a Risky Investment Option

As part of the crypto space, many antagonists still consider NFTs as a risky investment option. There has been an increasing fear among investors, slowing down the sales.

Are NFTs a Bubble?

Investors are now really asking, are NFTs a bubble? The truth is, considering the factors above, NFTs could seem like a bubble. But, when considering the history of crypto and other factors, NFTs are not a bubble and not dying. Below are those factors -

Past Crypto Success

The successful history of crypto and its growth is one of the main proof that NFTs are not just a bubble that will burst soon. For just about a decade, crypto has hit over $2 trillion. NFTs have made millions, if not billions, for investors. The NFT sales are known to fetch astronomical prices.

Supported by Real Assets

Secondly, the NFT space is connected to other digital or real-world assets. For instance, some NFTs represent pieces of art, music, or in other cases, the first tweet ever. Their connection to real-world assets is an advantage, meaning the assets can continue to hold onto their value.

Continually Gaining More Use Cases

Another reason why NFTs should not be considered a bubble is because of their many use cases, which increase every other day. Initially, these assets were purely for digital identities. However, over the years, they gained adoption in P2E, M2E, and even more recently, the metaverse. The metaverse especially is continually adopting NFT.

Adoption by Large Institutions

The use cases are expanding beyond just the metaverse. Social media platforms have been discussing ways to implant NFTs into their ecosystem. Facebook, Instagram, and Twitter are already halfway to implementing NFT systems. Adidas, Nike, Gucci, KFC, and other global brands have also been associated with NFTs. The fact that NFTs are continually getting more adoption by top institutions puts them on an excellent path to success.

When will The NFT Bubble Pop

No, NFTs are not a bubble. They are reliable investment assets that will continually gain popularity. NFTs are part of the larger crypto market, which has always recovered even after harsh conditions. Although NFT sales and the value of the assets have been lowering, NFTs will recover and be profitable soon. NFTs are gaining adoption globally at a fast rate. Companies like Meta, Twitter, Adidas, Nike, and KFC have explored the NFT space and adopted the assets. As this adoption continues to surge, so will the demand and growth of this class of assets. Every investor should note that investing in NFTs requires profound research to get the right project.

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