Cryptoverse: The Flame of NFT

July 5 (Reuters) – The NFT dream isn’t dead yet, but it’s taken a big hit.

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

Monthly sales on the largest NFT marketplace, OpenSea, fell to $700 million in June, down from $2.6 billion in May and a far cry from January’s near $5 billion peak .

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At the end of June, the average NFT sales fell to $412, from $1,754 at the end of April, according to NonFungible.com, which tracks sales on the Ethereum and Ronin blockchains.

Gauthier Zuppinger, co-founder of NonFungible.com, said: “The crypto bear market has certainly had an impact on the NFT space.

He added: “We have seen too much speculation, too much hype around this asset class. “Now we see some sort of drop just because people realize they’re not going to be millionaires in two days.”

The NFT market has crashed along with cryptocurrencies, commonly used to settle assets, at a time when central banks have raised interest rates to combat inflation and risk appetite has dried up.

Bitcoin has lost about 57% in the six months of the year, while ether has dropped 71%.

DIP OR DEATH GOD?

For critics, the crash confirms the folly of buying such assets, tradable blockchain-based records linked to digital files such as images or videos, often is a work of art. read more

The Malaysian businessman who bought NFT in Jack Dorsey’s first tweet for $2.5 million last year struggled to get a bid of more than several thousand dollars when he tried to resell it in September. Private. read more

But Benoit Bosc, global product manager for crypto trading firm GSR, sees the downturn as the perfect time to build a collection of the company’s NFTs – the crypto equivalent of showcases. art of traditional banks to impress customers.

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

His purchases include an NFT from the Bored Ape Yacht Club, a set of 10,000 animated monkeys made by US-based company Yuga Labs and promoted by the likes of Paris Hilton and Jimmy Fallon.

Such is the hype surrounding Bored Apes that Yuga Labs raised $285 million in April by selling a token it said could be exchanged for land in the Bored Apes-themed virtual world it has yet to receive. debut. read more

However, the average selling price for Bored Ape fell to around $110,000 in June, halving from its January peak of $238,000, according to market tracker CryptoSlam.

At the New York office, Bosc put in three monitors to display his NFT, consisting of different pixelated characters, and a Bored Ape purchased for $125,000.

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

GAME END? GAME ON?

However, the future of the NFT is clearly uncertain, as the era of low interest rates that encouraged investors to make risky bets is over.

Some market watchers say the influence of the NFT on the art market will shrink. Meanwhile, although the hyped vision of a blockchain-based metaverse has yet to materialize, enthusiasts hope NFT will shake up the gaming industry, for example by allowing players to own assets. properties in the game as skins represent. read more

“Everybody believes that games are going to be the next big thing in blockchain,” said Modesta Masoit, chief financial officer at blockchain tracking firm DappRadar.

However, this risky combination of gaming and financial speculation can be tricky. According to John Egan, CEO of technology research firm L’Atelier, most gamers prefer games that don’t include NFT or “play for money” components.

While groundbreaking new crypto regulations agreed to by the European Union last week have mostly ruled out the NFT, Spain is looking to restrict how video games sell virtual assets for money. real. read more

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

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

“Ultimately it’s a situation where extraordinary sums of money are being paid for unusually limited assets that are not actually generating any cash flow,” he said.

But the basic concept of creating unique digital assets remains “fundamentally important” and will have “major applications” for the financial sector in the future, he said.

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Reporting by Elizabeth Howcroft; Edited by Pravin Char

Our standards: Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, in accordance with the Trust Principles, of its commitment to integrity, independence and impartiality.

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