Are We Still on an NFT Downturn?

Non-fungible tokens (NFTs) have been one of the most dynamic and prominent parts of Web3 over the last two years. But, due to uncertainties, the NFT market had a rough start this year.

Starting with the COVID-19 pandemic that brought a lot of loss of demand up until people emerge from it, prices went higher including NFTs. And when Russia invades Ukraine, inflation hits high because of the food & energy being affected.

With demand outstripping supply, the government wants to step in. Patrick Reinmoeller and Karl Schmedders, professors of Strategy and Innovation at the Institute for Management Development said:  

Prices of non-fungible tokens remain high for now and may continue to increase for some time, but a crash will come. With central banks set to tighten monetary policy in an effort to rein in inflation, new and untested asset classes are likely to be punished harder than more reliable ones.

NFTs indeed getting crushed. But declarations that NFTs are finished ignore another plain truth: The economy at large is in strife too. NFTs and Cryptocurrency might be out of favor for a time as interest rates continue to rise. But even if  we are in a rising interest rate environment, small companies, especially in the tech industry, would always have something to do about it. 

NonFungible, the world’s largest NFT market data platform, released its Q1 Market Analysis. The report said that even though the number of active wallets is decreasing, their buyers are still higher than the number of sellers, which means the interest in buying NFTs is still present.

With nearly $8 billion in traded transactions in the first quarter of 2022, NonFungible, on Wednesday, stated, “The market cannot really be considered to have collapsed.” Meanwhile, a new report from Chainalysis shows that NFT activity has stabilized in 2022, but NFT transaction volume is still growing, despite fluctuating month-to-month.

A few might really understand NFTs, but everybody talks about them as they remain a multibillion-dollar market. NFTs are here to stay because of their enormous profit potential.