What is happening to the NFT market?

It may be too early to talk about the collapse. But after hitting a record in 2021, the NFT (non-fungible token) market experienced a strong setback in the first quarter of 2022. The number of sales, according to a report by NonFungible, a reliable compass for the sector, is collapsed by 50% In the first three months of 2022 compared to the previous quarter. The report speaks of a “very noticeable” slowdown in the volume of buyers and sellers. On the other hand, the amount of dollars invested is less clear, decreased by 5% Thanks above all for the record numbers of some digital collectible goods. In 2021, the year of the NFT boom, this market reached a record high 17 billion dollars And a 21,000% increase from 2020, when it was little more than a niche sector.

What is Nft, or Digital Collectibles

Nft, which we can translate in Italian as “digital holdings”, are “tokens”. Similar to bitcoins, it guarantees those who own it a certificate of existence and ownership written on the blockchain. It is one of a kind, and this has generated expectations and interest from digital art collectors. Some have invested millions of dollars to get one: the series Kryptoponics Sales of more than half a billion dollars, 50- Masoud Millions.

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A few weeks ago, however, the news she denied from the first tweet Jack Dorseyfounder of Twitter, sold in 2021 for $2.9 million, relisted but failed to find better deals than $14,000. Perhaps the most obvious sign that something is going on in this market.

Nft: Data for the first three months of 2021

In the first three months of 2022, something jammed happened. Profits from exchanges exist reduced by 3%, The report shows, with losses in value compared to the initial investment that They reach 50% on average Compared to the last quarter of 2021. For the first time, some clips show a negative balance, and the report reads again.

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Games, for example, show a Total loss of nearly 50 million dollars compared to the previous quarter. While the report is generally clear, people’s interest in this sector appears to be waning: Second Google Trend Internet Nft searches are decreased by 80% in the period under analysis.

The reasons: inflation, monetary policy and the war in Ukraine

The NonFungible report points to some broad explanations for this market’s crash: If last year was a record year for the markets, marked by Wall Street records and Nasdaq-listed technology in particular, 2022 should face new challenges. “economic inflation, which hinders all investments that promise long-term returns; there monetary tightening by central banks (initially the Federal Reserve, since a large part of this market is in the United States), which turn off the taps that have so far flooded the markets with money; The Unknown war in Ukrainewhich limits the enthusiasm for more speculative investments.

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Indications that seem to suggest a clear reading: Even this particular type of asset, highly volatile and speculative, is beginning to behave like traditional economics assets, such as stocks or bonds. more or less than that Bitcoin and other cryptocurrencies In the past few years.

Just as Bitcoin has fallen 43% since last November, Nasdaq shares have seen a 23% contraction. In short, NFT appears to be following the trends of the technology market, which is sensitive to cyclical elements that undermine confidence in the medium- and long-term future.

Collapse after a record in 2021

Each year 2022 is in stark contrast to 2021, when, once again, Nonfungible reports, the digital collectibles market reached $17.6 billion, a 21,000% increase compared to 2020, again according to the observatory.

The The Wall Street Journal It was among the first newspapers to report non-fungible data. An article signed by Paul Vigna, one of the most trusted publishers of issues on the blockchain, takes the NFT market crash for granted.

The sale of non-redeemable tokens has dropped to a daily average of about 19000 last weekAnd 92% decrease From a peak of about 225,000 in September. On the other hand, the number of active wallets in the NFT market It fell 88% to about 14,000 From a maximum of 119,000 in November. The Wall Street Journal article was fiercely contested online by digital collectors who accused the financial newspaper of misinterpreting the data and failing to verify the source of the data. But even when going to the source, it seems clear that something in this area starts to creak.

And if it’s not a crash, it’s definitely undergoing a natural adjustment for such an immature market. The boom could not last for long and investors are looking for new stocks. Maybe not the end, but a new beginning.

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