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Cryptoverse: The Pyre of NFTs

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

The market shone gloriously last year as crypto-rich speculators spent billions of dollars on risky assets, driving up prices and profits. Now, six months into 2022, it looks ugly.

Monthly sales volume in the largest NFT marketplace, OpenSea, fell to $700 million in June from $2.6 billion in May and well off January’s high of nearly $5 billion.

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By the end of June, the average NFT sale 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 certainly had an impact on the NFT space,” said Gauthier Zuppinger, co-founder of NonFungible.com.

“We’ve seen so much speculation, so much hype around this type of asset,” he added. “Now we’re seeing kind of a decrease just because people realize they’re not going to become millionaires in two days.”

The NFT market crashed along with cryptocurrencies, which are typically used to pay for assets, at a time when central banks raised rates to fight inflation and risk appetite waned. is weakened.

Bitcoin lost around 57% in the six months of the year, while Ether fell 71%.


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

The Malaysian businessman who bought an NFT of Jack Dorsey’s first tweet for $2.5million last year struggled to get offers of more than a few thousand dollars when he tried to resell it in April. Read more

But Benoit Bosc, global product manager at crypto trading firm GSR, sees the downturn as the perfect time to create a corporate NFT collection – the crypto equivalent of traditional art bank displays to impress clients. .

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

His purchases include a Bored Ape Yacht Club NFT, a set of 10,000 cartoon apes made by American company Yuga Labs and promoted by Paris Hilton and Jimmy Fallon.

Such is the hype around Bored Apes that Yuga Labs raised $285 million in April by selling tokens it claims can be exchanged for land in a Bored Apes-themed virtual world that it doesn’t. has not launched yet. Read more

Still, the average selling price of a Bored Ape dipped to around $110,000 in June, after halving since peaking at $238,000 in January, according to market tracker CryptoSlam.

In his New York office, Bosc has set up three screens on which to display his NFTs, which include various pixelated characters and a Bored Ape purchased for $125,000.

“For us, it’s also a branding exercise,” Bosc said. Owning a valuable NFT and using it as a social media profile picture is a way to establish “respectability, authority and influence” in the crypto sphere, he said.


Nonetheless, the future of NFTs is distinctly 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 the influence of NFTs on the art market will diminish. Meanwhile, even though the much-hyped vision of a blockchain-based metaverse has yet to come to fruition, enthusiasts expect NFTs to disrupt the gaming industry, for example by allowing gamers to own in-game assets such as avatar skins. Read more

“Everyone thinks games are going to be the next big thing in blockchain,” said Modesta Masoit, CFO of blockchain tracker DappRadar.

This risky combination of gambling and financial speculation can, however, run into difficulties. Most gamers prefer games that don’t include NFTs or play-to-earn components, according to John Egan, CEO of tech research firm L’Atelier.

Although groundbreaking new crypto regulations passed by the European Union last week primarily exclude NFTs, Spain is separately seeking to clamp down on how video games sell virtual assets for real money. Read more

Meanwhile, the largest NFT-based game, Axie Infinity, saw its in-game token plummet to less than half a cent, from a peak of 36 cents last year.

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

“At the end of the day, it’s a situation where extraordinary amounts of money are being paid for extraordinarily limited assets that aren’t really producing 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 industry in the future, he said.

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Reporting by Elizabeth Howcroft; Assembly Pravin Char

Our standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias by principles of trust.

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