Nfts
Can NFTs make a comeback? Not until traders feel rich, says analyst – DL News
- NFTs are trapped in a brutal bear market.
- The launch of the Ethereum ETF could reignite interest, analyst says.
- Collectors are still buying some high-end NFTs.
In 2024, there is little love left for NFTs.
Popular collections, such as Yuga Lab’s Bored Ape Yacht Club, are now available costs less than before the NFT mania started three years ago.
Even CryptoPunks, the best NFT collection with a market value of around $874 millionseem trapped in a brutal bear market.
The situation won’t change until crypto traders feel rich again, said Nicolas Lallement, co-founder of NFT data platform NFT Price Floor. DL News.
He said capital “will likely shift to blue-chip NFTs” if the launch of Ethereum spot exchange traded funds triggers a rally later this year.
Bluechip is a stock term for the most trusted and valuable companies on the market.
In crypto, traders use the word to describe tokens or NFTs that they view as having established value.
Essentially, Lallement is hinting at a repeat of the market conditions associated with the NFT’s first bull run.
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Demand for NFTs skyrocketed in late 2021 after Bitcoin surged around 1,140% in the previous year.
With large amounts of newly created capital circulating, many who have made money have piled into NFTs to flaunt their wealth.
“Ultimately, NFTs act as status symbols,” Lallement said.
Market dilution
There is no guarantee that money from a market-wide rally will flow into NFTs specifically, let alone those that were previously popular.
“We now have NFTs on Bitcoin, Solana and Ethereum L2, so the market is no longer focused just on Ethereum like it used to be,” Lallement said.
It’s not just the newer NFTs that are diluting the market.
“Everyone is currently busy with memecoins and DeFi, especially now that celebrities are also participating in it,” said Mahan Fathi, CEO of NFT analytics site NFT Valuations. DL Newsadding that he doesn’t see much liquidity flowing into NFTs.
Many traders previously used NFTs as speculative trading vehicles.
The low liquidity of NFTs makes them extremely volatile, creating the conditions for huge gains – or total losses.
Memecoins, low-use cryptocurrencies that trade purely on popularity, have supplanted NFTs as the assets of choice for traders looking for high-risk bets.
Memecoins based on presidential candidatescelebrities and even comic book artist Matt Furie Pepe the frog character have seized the market in recent months.
Pockets of activity
Despite the negative sentiment toward NFTs, some high-end collectors continue to allocate them, Fathi said.
In February, a full set of Autoglyphs NFTs sold for $14.5 million. Autoglyphs are among the first generative art NFTs created on the Ethereum network.
Then, in April, a rare alien CryptoPunk sold for $12.5 million. Alien Punks are highly coveted because only nine of the 10,000 collections feature this trait.
Yet these sales are dwarfed by those of the previous NFT bull market. In February 2022, another alien CryptoPunk sold for a record $24 million.
There is also the question of whether these sales impact broader demand for NFTs.
Lallement says yes.
“I expect at some point there will be a trickle-down effect from these high-end NFTs to more affordable products,” he said.
Tim Craig is DL News’ DeFi correspondent based in Edinburgh. Contact him with advice at tim@dlnews.com.