Since January 2022, NFTs rapidly started declining in popularity. What happened? Well, I see 3 reasons.
Reason 1: The Crypto crash.
On November 12 2021 Bitcoin hit its all-time peak when 1 BTC cost over 64000 USD, after that happened a huge crash happened. In just 1 month the value of 1 bitcoin dropped by almost 20000 USD. And it’s not only bitcoin but almost every cryptocurrency that had a crash. For example, Ethereum which also hit its all-time peak on the 12 of November 2021, crashed after that, losing around 12% of its value in one month.
Reason 2: The Crypto Scams.
Another problem was the many crypto scams that happened during the high time of NFTs. One of them that recently came to light was Logan Paul’s “Crypto ZOO”. It was supposed to be an NFT “game” where you buy a coin called ZOO and with this coin, you would buy NFT eggs that would hatch into animals and you could crossbreed these animals to sell them at a higher price. However, even though many people invested thousands if not millions of dollars into the ZOO coin to buy the NFT eggs, the game never launched, and thousands of people lost money. There is a very interesting 3 part investigation on the topic by a YouTuber Coffezilla.
Reason 3: The NFT Community.
The thing about the NFT community is that many of them are really cringe and annoying people who think they’re better than everyone because they have a picture of a monkey in 3D glasses. That’s what caused many people who were interested in NFTs to stray away from them because they didn’t want to be thought of as an “average NFT owner”. Also, many people, especially the meme community just make fun of people who own NFTs .
These are the 3 main reasons for the NFT’s downfall, if you have anything else that I missed, be sure to comment.
Sources:
Like the stock market, crypto is a risky asset. When the Federal Rate increases, it can negatively affect the NFT marketplace. It’s unclear if and when the crash will end when inflation does — there’s no timetable on that either. For now, the market is volatile.
Thanks for the article! Was interested to share that idea.
NFTs are mostly driven by crypto trends. In turn, crypto as the whole stock market were going down during the whole 2022, which means there is no way for NFTs, especially now, become popular again untill FRS will make money cheaper by decreasing rates. Correlation is obviosly visible, NFT’s value for most of people is not proven yet, so noone will waste “expensive” money in nowadays reality for Digital piece of art, value of which is still under consideration.
I personally am not surprised by this. NFT value was always set by people’s mindsets. I mean, like money, the 100 zł bill is worth far less than 100 zł. However, it is legally said, that it is worth 100 zł. But when it comes to NFT, it had it’s 5 minutes, but all the 5 minutes come to an end, so when people weren’t so hyped up about it anymore, the fake value of it dropped drastically.
i think it’s abvout Market saturation alsso The NFT market has grown rapidly in recent years, leading to a large number of NFTs being created and sold. This saturation may have led to a decrease in demand for NFTs in the future.