The Collapse in the Value of NFTs and SuperRare CEO’s Comment

The market value of many NFTs has literally plummeted from their 2021/2022 highs, but SuperRare’s CEO isn’t letting it get to him.

Recently, John Crain lashed out at an article declaring the death of NFTs, even though he said they were completely changing.

The Collapse of NFT Value: SuperRare CEO Comments

The NFT market exploded in the first part of 2021, coinciding with the first phase of the last major bullrun, and for at least a year it was in near constant growth.

But it was a speculative bubble, and it was not difficult to understand it, even at the time.

With the 2022 cryptocurrency bear market, such a bubble has burst and NFT Marketplace practically collapsed.

At the peak of late 2021/early 2022, an initial decline had already followed, but it was after the implosion of the Terra/Luna ecosystem in May two years ago that the real collapse began.

Indeed, while the weekly peak in on-chain NFT trading volume occurred in August 2021, with an average of $450 million per day, by early May 2022, this daily average had fallen to $265 million.

But by October last year, that average had even fallen below $10 million, a 98% collapse from the 2021 peak.

However, with the bull run crypto which started between October and November 2023, there was a peak rebound.

Just think that by December the price of the NFT had returned to almost $75 million. However, even this rebound initially slowed down and then underwent a correction, so much so that the daily average of NFT transactions on-chain is now down to around $32 million.

Are NFTs dead?

The main collapse was observed in NFTs linked to the art market, and in particular image files.

At its peak, the NFT market reached nearly 200,000 tokens traded per day, for a total daily value of more than $191 million.

Since then, there has been a slow decline that has nearly caused the art NFT market to implode, with drops of over 90%.

For this type of digital content, no market recovery is observed, so it is difficult to imagine that for art-related NFTs there could be a significant recovery in the short term.

SuperRare CEO’s Comment on the NFT Market Value Collapse

John Crain, CEO of Super rareHowever, does not agree.

SuperRare is primarily a marketplace for artistic NFTs, and Crain writes on his official X profile that the tons of negativity against NFTs should be seen in a more general context.

Writing:

“People forget that we literally started from scratch six years ago, and two weeks ago on Base there was over $44 million in NFTs. NFTs are clearly dead.

He adds, however, that he believes we will continue to see a change in this business model.

On the other hand, even the incriminated article suggested a change in the economic model.

Change

The problem is that it’s hard to imagine that the current bull market in artistic NFTs can actually recover.

On the contrary, it is easier to imagine that the same NFT market could change, addressing new sectors.

The article rightly points out that they are not an asset in themselves, but only a means of recording on the blockchain who owns the rights to an asset.

Their primary use should be to certify ownership and authenticity, and their main features should be those related to blockchain functionalities, such as interoperability, secure transfer, and verification.

In short, the real asset is the underlying, i.e. what the non-fungible token represents, and not the NFT itself.

The idea that by purchasing an NFT you acquire an asset that will appreciate over time actually has too weak foundations to support a market like that of 2021.

Real World Asset (RWA)

The next step, however, should be to use NFTs to tokenize real-world assets, with what is called RWA.

The key point is precisely the fact that an NFT actually represents a kind of certificate of ownership, verifiable and unforgeable.

The difficulty lies in creating a certain and unambiguous link between a real asset and a token, and for this it will probably be necessary to refer to a certification body, which most likely cannot be decentralized.

In this form, NFTs can also be linked to the art world, as in theory they could enable the tokenization of real works of art.

If the RWA token market has not yet taken off, it is probably because sufficient guarantees have not yet been provided to ensure that a certain token is actually associated with an ownership right.

When this problem is effectively solved, the RWA market will truly be ready to take off.

Speculation

Rather, what happened in 2021 is pure speculation.

A classic, simply inflated speculative bubble, in which those who bought an NFT only did so because they hoped to resell it at a higher price.

These types of bubbles are always destined to burst sooner or later, although once burst they do not always completely wipe out a market.

In the early 2000s, for example, the speculative bubble of “dot-coms,” publicly traded technology companies that claimed to trade online, burst. With the bursting of this bubble, many of these companies’ stocks disappeared from the stock exchanges, but some remained and, a decade later, they returned not only to the levels reached during the bubble, but also well beyond.

Amazon stock, for example, went through this speculative bubble, where in a few years its price rose from $0.1 to more than $5 only to fall back to $0.3 after the bubble burst, but less ten years, it was back to $5, and after a little over twenty years, it reached almost $200.

It’s unclear how the NFT market will end up, but if it evolves based on the needs and desires of investors, it could come back even stronger than before, despite the disappearance of many NFTs.

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