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Cryptoverse: The bonfire of NFTs

July 5 (Reuters) – The NFT dream is not dead, but it has taken a major, non-fungible hit.

The market shone gloriously over the past year as crypto-rich speculators spent billions of dollars on risky assets, sending prices and profits skyrocketing. Now, six months into 2022, things are looking ugly.

Monthly sales volume on the largest NFT marketplace, OpenSea, plummeted to $700 million in June, compared to $2.6 billion in May and a far cry from January’s peak of nearly $5 billion.

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By the end of June, average NFT sales had fallen to $412 from $1,754 at the end of April, according to NonFungible.com, which tracks sales on the Ethereum and Ronin blockchains.

“The crypto bear market has definitely impacted the NFT space,” said Gauthier Zuppinger, co-founder of NonFungible.com.

“We’ve seen so much speculation, so much hype around these types of assets,” he added. “Now we’re seeing some kind of decline just because people realize they’re not going to be a millionaire in two days.”

The NFT market has collapsed along with the cryptocurrencies normally used to pay for assets at a time when central banks have been raising interest rates to fight inflation and risk appetite has waned.

Bitcoin is down around 57% over the six months of the year, while Ether is down 71%.


For critics, the crash confirms the folly of buying such assets, tradable blockchain-based records linked to digital files such as images or videos, often works of art. Continue reading

The Malaysian businessman, who bought an NFT of Jack Dorsey’s first tweet for $2.5 million last year, struggled to get bids in excess of a few thousand dollars when he tried to resell it in April. Continue reading

But Benoit Bosc, global head of product at crypto trading firm GSR, sees the downturn as the perfect time to build a corporate NFT collection — the crypto equivalent of the art that traditional banks showcase to impress clients.

Last month, GSR spent $500,000 on NFTs from what Bosc calls “blue-chip” collections — those with a large online following.

Among his purchases is an NFT from Bored Ape Yacht Club, a set of 10,000 cartoon monkeys made by US company Yuga Labs and promoted by the likes of Paris Hilton and Jimmy Fallon.

Such is the hype surrounding Bored Apes that in April, Yuga Labs raised $285 million by selling tokens that are said to be exchangeable for land in a Bored Apes-themed virtual world, which it has yet to launch . Continue reading

Still, the average selling price for a Bored Ape fell to around $110,000 in June, having halved since its peak of $238,000 in January, according to market tracker CryptoSlam.

In his New York office, Bosc set up three screens on which to view his NFTs, including various pixelated characters and a bored monkey that was purchased for $125,000.

“It’s also a brand exercise for us,” Bosc said. Owning a valuable NFT and using it as your profile picture on social media is a way to establish “honesty, authority and influence” in the crypto sphere, he said.


Nonetheless, the future of NFTs is extremely uncertain as the era of low interest rates that encouraged investors to take risky bets is coming to an end.

Some market observers say that NFTs’ impact on the art market will shrink. While the much-touted vision of a blockchain-based metaverse is yet to materialize, enthusiasts expect NFTs to disrupt the gaming industry, for example by allowing players to own in-game assets like avatar skins. Continue reading

“Everyone believes games are going to be the next big thing on blockchain,” said Modesta Masoit, chief financial officer at blockchain tracker DappRadar.

However, this risky combination of gambling and financial speculation can encounter difficulties. According to John Egan, CEO of technology research firm L’Atelier, most gamers prefer games that don’t include NFTs or play-to-earn components.

Although the groundbreaking new crypto regulations agreed by the European Union last week largely barred NFTs, Spain is separately trying to curb the way video games are selling virtual assets for real money. Continue reading

Meanwhile, the biggest NFT-based game, Axie Infinity, has shrunk to less than half a cent from a peak of 36 cents last year.

For L’Atelier’s Egan, the NFT market is unlikely to recover in its current form.

“Ultimately, it’s a situation where extraordinary amounts are being paid for extraordinarily limited assets that don’t produce any real cash flow,” he said.

But the underlying concept of creating unique digital assets is still “fundamentally important” and will have “massive applications” for the financial sector in the future, he said.

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Reporting by Elizabeth Howcroft; Editing by Pravin Char

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