The market value of many NFTs has literally plummeted from the peaks of 2021/2022, but the CEO of SuperRare is not having it.
Recently John Crain lashed out against an article that declared NFTs dead, even though it said they are completely changing.
The collapse of the value of NFTs: the CEO of SuperRare comments
The NFT market exploded during the first part of 2021, coinciding with the first phase of the latest major bullrun, and for at least a year it was practically in constant growth.
However, that was a speculative bubble, and it was not difficult to understand it even then.
With the bear-market crypto of 2022, such a bubble burst, and the NFT market practically collapsed.
At the peak of late 2021/early 2022, a first decline had already followed, but it was after the implosion of the Terra/Luna ecosystem in May two years ago that the real collapse began.
In fact, if the weekly peak of on-chain NFT trading volume occurred in August 2021, with an average of 450 million dollars daily, at the beginning of May 2022 this daily average had dropped to 265 million.
In October of last year, however, this average had dropped even below 10 million dollars, that is, with a collapse of 98% compared to the peak of 2021.
However, with the bull run crypto that started between October and November 2023, there was a peak rebound.
Just think that in December it had returned to almost touching 75 million dollars. However, even this rebound first slowed down, and then underwent a correction, so much so that the average daily onchain NFT trades have now dropped to around 32 million dollars.
Are NFTs dead?
The main collapse was experienced by NFTs related to the art market, and in particular image files.
At the peak, the NFT market had reached almost 200,000 tokens traded per day, with a total daily value of over 191 million dollars.
Since then there has been a slow decline that has almost caused the artistic NFT market to implode, with drops of over 90%.
For this type of digital content, a market recovery is not being observed, so it is difficult to imagine that for art-related NFTs there could be a significant recovery in the short term.
The comment of the CEO of SuperRare on the collapse of the value of the NFT market
John Crain, CEO di SuperRare, however, does not agree.
SuperRare is primarily a market for artistic NFTs, and Crain writes on his official X profile that the tons of negativity against NFTs should be reviewed in a more general framework.
Super interesting to see the sentiment on CT right now. Tons of negativity around NFTs. People forget that we literally started at 0 six years ago, and two weeks ago @base had over $44M in NFT mints. NFTs are clearly dead 😂 pic.twitter.com/bK1Mr7OcEu
— SuperRare John 💎 (@SuperRareJohn) June 26, 2024
Writes:
“People forget that we literally started from scratch six years ago, and two weeks ago on Base there were over 44 million dollars in NFT. NFTs are clearly dead.”
However, he also adds that he believes we will continue to see a change in this business model.
On the other hand, even the incriminated article suggested a change in the business model.
The change
The problem is that it is difficult to imagine that the current bull market of artistic NFTs can really recover.
It is instead easier to imagine that the same NFT market could change, addressing new sectors.
The article rightly pointed out that they are not an asset in themselves, but only a way to record on the blockchain who holds the rights to an asset.
Their main use should be to certify ownership and authenticity, and their main characteristics should be those related to the functionalities of the blockchains, such as interoperability, secure transfer, and verification.
In short, the real asset is the underlying, that is, what the non-fungible token represents, not the NFT itself.
The idea that by purchasing an NFT one was acquiring an asset that would appreciate over time really has foundations that are too weak to support a market like that of 2021.
The Real World Asset (RWA)
The next step, however, should be to use NFTs to tokenize real-world assets, with the so-called RWA.
The key point is precisely the fact that an NFT actually represents a sort of certificate of ownership, verifiable and non-falsifiable.
The difficulty lies in creating a certain and unambiguous connection between a real asset and a token, and for this it will probably be necessary to refer to some certifying body, which very unlikely can be decentralized.
In this form, NFTs can also be linked to the world of art, because in theory they could allow the tokenization of real works of art.
If the RWA token market has not yet taken off, it is probably because sufficient guarantees have not yet been provided to ensure that a certain token is actually associated with a property right.
When this problem is effectively resolved, then the RWA market will truly be ready to take off.
Speculation
Instead, what happened in 2021 is just pure speculation.
A classic speculative bubble simply inflated, in which those who bought an NFT did so only because they hoped to resell it at a higher price.
This kind of bubbles is always destined to burst sooner or later, even if not always once they burst, they completely wipe out a market.
For example, in the early 2000s, the speculative bubble of the so-called dot-coms, the technology companies listed on the stock exchange that claimed to do business online, burst. With the burst of that bubble, many dot-com stocks disappeared from the stock exchanges, but some remained, and a decade later they returned not only to the levels reached during the bubble but also well beyond.
The Amazon stock, for example, went through that speculative bubble, when in a few years its price went from $0.1 to over $5 only to drop back to $0.3 after the bubble burst, but in less than ten years it was back to $5, and after a little over twenty years it reached nearly $200.
It is not known how the NFT market will end up, but if it evolves following the needs and desires of investors, it could come back even stronger than before, despite the disappearance of many NFTs.