NFT enthusiasts hold their own despite falling crypto prices
The fall in the price of cryptocurrency this week has eroded the dollar value of NFTs and increased the cost of buying and selling them, which could be a setback for the burgeoning digital asset market. But NFT collectors don’t bail out.
Non-fungible tokens – a way to trade digital assets by registering their ownership status on the blockchain – exploded in popularity in February and March of this year, registering hundreds of millions of dollars in sales. Read more
The sudden boom is partly attributed to the surge in crypto prices in 2020; NFTs are typically bought with ether or cryptocurrency dollars. Read more
But the crypto market hit a roadblock on Wednesday when as much as $ 1 trillion was wiped from the global crypto complex and the prices of ether and its bigger cousin Bitcoin fell 30% to 40%. .
NFT prices are normally quoted in ether markets, meaning sellers can adjust prices higher to keep them constant in dollars. But with the ether still trading a third of recent highs, NFT dollar values will have fallen sharply.
A collector who goes by the pseudonym “Pranksy” said the value of his cryptocurrency wallet fell by more than $ 10 million at one point on Wednesday.
But he said he didn’t consider his collection of over 100,000 NFTs to be less valuable because he hadn’t sold them.
“People who spent thousands of dollars on NFT aren’t going to sell them at 50% off tomorrow, at least not a lot are. Just like traditional art markets that go against Wall’s trends. Street, I think many view some NFTs as a store of value, ”Pranksy told Reuters.
Enthusiasts claim that artwork, virtual lands, in-game items, or other digital assets other than NFTs represent holding value separate from the cryptocurrencies used to purchase them. Read more
Andrew Steinwold, a Chicago-based crypto investor who runs an NFT fund, said: “Because everything is valued in ether, certainly … the valuation will be much lower.”
“But we’re a five-year fund, so we think in terms of years, not weeks.”
The NFT frenzy was chilling even before this week. Data from OpenSea, which claims it is the largest market for NFT trading, shows April sales at $ 93.6 million, up from nearly $ 150 million in March. Read more
As cryptocurrencies plummeted, the NFT market was hit by so-called “gas” fees – the payment made to crypto-miners who perform the transaction on the blockchain.
On Wednesday, gasoline prices climbed as demand for the purchase and sale of ether increased. This caused NFT’s liquidity to dry up, as buyers may have delayed transactions to save on gas fees, Pranksy said.
On OpenSea, daily volumes fell to $ 1.1 million on Wednesday from $ 2 million on Tuesday, as “gas prices made cheaper items difficult to buy,” said Hamish Barnes, head of growth and from the OpenSea community.
NFT’s sales volume on the Ethereum blockchain was $ 19,687,241 on Wednesday, up from $ 15,637,693 the day before, according to NonFungible.com, a site that tracks NFT market activity.
The number of sales was down to 2,462 on Wednesday from 4,113 on Tuesday.
NonFungible.com co-founder Gauthier Zuppinger said the NFT market has become increasingly decorrelated with the crypto market.
“I don’t think we’ll see a direct impact on the NFT space now or in the next few days,” Zuppinger said, adding that crypto-rich investors might even see NFTs as less risky than cryptocurrencies “because that they are supported by the “use case”.
Nifty Gateway, an NFT marketplace owned by Gemini, said there was no visible change in behavior on the platform during the cryptocurrency’s volatility.
“Our collectors generally have an affinity for digital art, so they buy and keep their NFTs,” said a spokesperson.
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