Non-Fungible Tokens (NFTs) are digital assets that have a unique identification code and metadata that are almost impossible to replicate. NFT technology has had a major impact on the corporate, sports, and art industries.
For example, companies like GameStop, Adidas, and Disney have all launched and sold digital assets in the form of NFTs. Similarly, teams like Manchester United and Formula 1’s Alpine and RedBull have all ventured into the industry.
Most importantly, artists have used NFTs to reach new heights in the industry. Today, some successful artists have made millions of dollars minting NFTs. However, there are signs that the industry is going through some weaknesses. In this article, we will explain the state of the NFT industry and whether the market has died.
The NFT market is expected to disrupt the art industry around the world. The NFT market grew to over $25 billion in 2021 as demand for tokens surged. Another estimate by Chainalysis said that the volume was actually over $40 billion.
This growth was driven by the popularity of popular NFT collections like Bored Ape Yacht Club, CloneX, and Moonbirds.
Most of these NFT transactions happened in leading platforms like OpenSea, Rarible, and Mintable among others.
In 2022, the collapse of cryptocurrencies had a major impact on the NFT market. According to Chainalysis, the volume of NFTs sold in 2022 has exceeded those sold in 2021. The report estimated that the volume of NFTs sold between January and August was over $42 billion.
However, there are signs that the hype that existed in 2021 has waned. For example, data compiled by Cryptoslam shows that the volume across all chains like Ethereum, Solana, and Immutable X has all declined in the past few months. For example, the volume of NFTs sold in Ethereum in August 2022 was $483 million, which was lower than the $3.7 billion in January.
At the same time, companies in the industry have started to adjust their operations. For example, OpenSea, the biggest company in the industry, laid off 20% of its staff. When making the announcement, the CEO lamented that the NFT industry was going through a winter season.
There are different ways that people can invest in NFTs.
First, one can buy NFTs directly and sell them in at a profit. Second, one can invest in tokens of platforms that provide solutions to the NFT industry like Immutable X, Enjin Coin, and Flow.
Another option is to invest in the native tokens released by popular NFT & GameFi companies like Sandbox, Decentraland and Bored Ape Yacht Club (who recently launched ApeCoin, its native cryptocurrency) and sell them later for profit.
In both cases, you can make profit doing it manually, or using automated tools. For buying and selling NFTs, there are many NFT bots, for example; SolanaBots, NiftyBot and OpencBot. Whereas for trading NFT tokens, there are automated trading robots such as NFT Profit.
There are mixed opinions on the future of NFTs. On the one hand, some analysts believe that the industry will continue growing as it gets more mainstream. They note that NFTs are safe and that they are disrupting the art market, which is estimated to be worth over $65 billion.
At the same time, some analysts believe that the NFT market is set to decline substantially in the coming years. They note that most NFTs have no intrinsic value and that many people who buy them often realize a loss when they sell them. For example, in 2020, Jack Dorsey, the founder of Twitter sold his first tweet for $2.9 million. In 2022, the same tweet was sold for just $14,000.
Analysts with a middle ground note that the NFT industry will exist albeit at a smaller scale. For example, they note that NFTs have a valid use case in industries like the metaverse and gaming. The metaverse is an industry that lets people interact with each other in a virtual universe.
In it, trading some NFT items will make sense. For example, blockchain projects like Decentraland and Sandbox have created virtual worlds where people can buy virtual property in form of NFTs. They can also have virtual events where NFTs are traded.
Further, NFTs will do well in the gaming industry. Today, gaming companies generate billions of dollars every year in microtransactions. Therefore, more large game companies will embrace these NFTs in the future. NFTs will also apply in industries like entertainment and fashion.
NFTs have gone through a cycle that most innovations go through. In their early days, most assets tend to rise sharply amid all the hype and then go through a major correction. For example, during the dot com bubble, most tech companies crashed but many others thrived afterward. The same thing happened in the early days of cryptocurrencies. Therefore, we believe that the NFT industry will go through a major shake-up and then remain relevant in the future.