A non-fungible token (NFT) is a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership.
Like cryptocurrencies, they are also digital tokens.
But compared to cryptocurrencies, which are fungible, or interchangeable, NFTs are singular and unique. Like cryptocurrencies, they exist on the blockchain as cryptographic assets.
The price direction of NFTs is a good way to take a barometer of a speculative technology market underpinning crypto.
I can tell you that the NFT marketplace is dead as a doornail and like how the price of Bitcoin has been engulfed in a crypto winter, it’s even worse in the NFT world.
How bad?
Multimillion-dollar NFT purchases marked down to $100 kind of bad.
In times when the crypto industry is bullish, NFT prices benefit from being a second derivative industry.
One might say that it’s just a 3X ETF of Bitcoin and for speculators, this can be either good or bad.
If you don’t believe me about the state of NFTs, let's roll through some of the data points.
In sectors from art to gaming, trading volume and prices for NFTs across all sectors have plunged about 95% since this time last year.
Since the start of September, NFT trading volumes have averaged $35 million per week.
The NFT capitulation is solid proof that NFTs are not stores of wealth and definitely aren’t inflation hedges.
I can also say that Bitcoin has pretty much failed every test of legitimacy as well during this crypto winter.
NFTs and Bitcoin are speculative assets that only do well during a time of increasing liquidity. The reverse holds true as liquidity tightens.
Many of those art NFTs are being bought and sold on OpenSea, the most prominent peer-to-peer marketplace.
Trading volume on the platform has plummeted from around $3 billion in September 2021 to $350 million in September 2022, an 88% drop.
Personally, I don’t believe in NFTs long term, I don’t get how a digital certificate will hold weight.
I rather have a real physical certificate that shows I own something like a real estate deed.
For those who might think NFTs could hold more utility in the future, then I am another hater you must convince.
Preaching to me about how long-term prospects are positive and investors should buy the dip is laughable.
Any serious asset doesn’t go down 95% in one year without a crisis and in the short-term survival of NFTs isn’t guaranteed.
This was a fad that caught on and rode the hysteria of Bitcoin to relevance and now is being dumped faster than one can imagine.
As we approach a Fed-induced recession, it’s hard to believe what Americans would be interested in buying an NFT when they get fired from their job.
Only 50% of Americans have even heard about NFTs, but most understand that securing shelter and food during unemployment is more important than throwing money down the toilet.
Avoid the NFT asset class, period.
