CryptoPunks – one of the most popular non-fungible tokens – will be issued in Times Square on May 12, 2021.
Alexi Rosenfeld | Getty Images
Has the NFT bubble burst yet?
Non-fungible tokens took the art world by storm earlier this year. NFTs are a type of digital asset designed to show that someone is the owner of a unique virtual asset, e.g. B. Online pictures and videos or even sports trading cards.
In March, South Carolina-based graphic designer Beeple, whose real name is Mike Winkelmann, sold an NFT at a Christie’s auction for a record $ 69 million. Jack Dorsey, CEO of Twitter, sold his first tweet as NFT for $ 2.9 million later that month.
More recently, a rare digital avatar known as CryptoPunk was sold for over $ 11.7 million on Thursday at Sotheby’s. NFT’s total revenue hit a staggering $ 2 billion in the first quarter, according to data from Nonfungible, a website that tracks the market.
But new data shows that the NFT hype is subsiding. Total sales fell from a seven-day high of $ 176 million on May 9 to just $ 8.6 million on June 15, according to Nonfungible figures. The volumes are now roughly back to the level at the beginning of 2021.
Meanwhile, the prices of the major NFTs appear to be slipping. One of the most popular NFT projects, CryptoPunks, fell from a weekly average of $ 99,720 in early May to $ 50,840 in early June. SuperRare digital art prices have fallen, on average, from a record $ 31,778 to $ 5,342 in a similar period of time.
One of the main reasons for the sharp decline in the NFT market, according to Gauthier Zuppinger, Chief Operating Officer of Nonfungible, was a sudden increase and decrease in sales of new crypto collectibles called MeeBits – made by the creators of CryptoPunks.
“The thing is, every time you notice such a rapid rise in a trend, you see a relative decline, which essentially represents a market stabilization,” he told CNBC.
Geoff Osler, CEO and co-founder of the NFT app S! NG, said the craze for digital collectibles was likely fueled by a “buildup” of fortune amassed by soaring cryptocurrency prices, and that the market is now calming down at the same time appears to be a decline in crypto markets.
Bitcoin, for example, fell from a record high of nearly $ 65,000 in April to just over $ 39,000 on Monday.
Proponents of NFTs do not see the recent slowdown as the end of the road for the market.
“Senior NFTs that have sold for millions of dollars were a sure sign that the market was treating them as speculative assets,” said Nadya Ivanova, chief operating officer of L’Atelier, a research firm affiliated with BNP Paribas CNBC.
“And by definition, speculative asset markets are unstable and can dry up.”
“The bigger question for NFTs is their long-term value, which we think is likely to be significant,” added Ivanova. “As augmented and virtual reality technology matures, normal people will spend more and more time – and therefore money – in virtual environments.”
It’s worth noting that the tech industry has been talking about augmented and virtual reality for years, with companies from Facebook to Microsoft making big bets on this area. But the technology has yet to be adopted by the mainstream.
Still, some in the crypto space are betting that NFTs could play a role in creating immersive virtual worlds.
Another potential use of NFTs that we’ll hear more about in the coming months is music, according to S! NG’s Osler. Artists like Kings of Leon and Steve Aoki, for example, jumped into the NFT frenzy.
“We have only seen the smallest part of where this is going,” Osler told CNBC. “Cryptocurrency is here to stay – and NFTs mean there is something to buy now. It’s the other side of the equation. And this will go well beyond digital art.
However, the NFT phenomenon has some problems to solve before it becomes a widely used method of proving ownership of art and other original content. Copyright is a big issue. A number of artists and content creators have complained that their works are stolen and resold online as NFTs. Osler said it is important that legal protection is “incorporated right into the NFTs themselves” and that consumers “have legal recourse if something goes wrong”.
Zuppinger expects “more and more promising projects” in the coming months and years.
“We are being reached every day by promising projects, large corporations and banking groups around the world that are gradually entering the NFT space, so we are pretty confident that the NFT space is not ‘dead’,” he said opposite CNBC.