[site-breadcrumb]
The price of non-fungible tokens (NFTs) declined sharply this week after shockwaves have swept through the crypto markets as the largest “stablecoins”, Terra and Tether, broke their peg to the USD.
Billions were wiped off the cryptocurrency market, some are wondering about a ‘Lehman’ moment for crypto. No wonder, all of this has put pressure on other cryptos as well, such as Bitcoin and Ethereum, and has put NFTs on the spot as well.
Tamas Muller, our crypto expert shared his thoughts on the recent downward trends of NFTs:
NFT Market Cooling Down as Investors Reassess Risk, But Innovation Continues
Following the intense excitement surrounding NFTs, the market now appears to be entering a cooling phase. Because the sector is still relatively young and underdeveloped, strong volatility is to be expected. There is also a noticeable mismatch between supply and demand. At the same time, broader financial markets have been declining, highlighted by major cryptocurrency crashes such as the collapse of Luna.
Under these circumstances, it is understandable that many investors are stepping back from higher-risk and more unconventional assets like NFTs. However, this does not mean the NFT ecosystem has disappeared entirely. New projects continue to emerge, and well-known NFT brands are actively building new initiatives.
A recent example is Yuga Labs, the company behind the Bored Ape Yacht Club collection. The firm successfully introduced ApeCoin and launched its metaverse project called Otherside. Moves like these demonstrate that, in the current stage of the market, expanding the real-world or digital utility of NFTs is crucial. Adding meaningful functionality and benefits beyond simple ownership can increase their long-term value.
With developments like these underway, it is likely that NFTs could experience another wave of popularity in the future. However, the next phase may focus less on digital art or fashion and more on practical applications that deliver tangible utility.
Find out more about cryptocurrencies and NFTs from our analysts!
And check out our picks for the best crypto brokers for 2022!