[Coinlive Feature] The NFT market might be livelier than you’ve imagine, here’s why

Ever since the U.S. Federal Reserve announced 50 bps rate hikes and balance sheet shrinks in May, no one was spared a bloodbath in the global financial market, be it stocks, bonds and cryptocurrencies. The main reason why financial market fell so badly is nothing more than the flood of liquidity caused by the U.S. government's massive economic relief. With the extra money in pocket and little to none workplace surveillance while working remotely, white collars became expert in stock and crypto investing. Given this situation, the NASDAQ Composite index has hit several all-time high during 2020 and 2021, while Bitcoin was on the edge of breaking the USD$70,000 mark in 2021.

As we step into 2022, inflation hits, purchasing power declines, fiscal policy tightens, the liquidity is evaporating faster than what the investors are expecting. Asset managers are struggling to execute trades without affecting prices, investors and Wall Street banks claim that liquidity across US markets is at its worst level since the early days of the pandemic in 2020.

How is the NFT market doing in this difficult period? The glory days were over, as for now.

USD volumes of NFT sales for the past year

As you can see from the chart above, NFT market started to boom in August 2021 and reached its peak in the beginning of 2022. Before the explosion of NFT, most of us have never heard of this term, even until today many are still clueless about it. So why do people choose to invest in NFT over cryptocurrency? As a NFT enthusiast, let me share with you a few insights on this matter.

1. Scarcity

Or ‘shortage’ in common. The value of a NFT project defines by its authenticity, community and utility, the more valuable it is, the greater demand it creates. Supply will determine the price of NFT and demand is the multiplier of price. As time goes by, the circulating supply will start to diminish as people tend to forget their wallet password, losing of private key or ledger and whatnot. Trading cards such as baseball and Pokemon, are the perfect example of the above. Not all trading cards worth a pile after 10 or 20 years, only for those with recognition and higher rarity.

Back to NFT, one of the representative projects has got to be Cryptopunk, which was released back in June 2017. It is a free-to-mint project that comes with a total supply of 10,000, which means buyers only need to pay for a small amount of gas fee and they are good to go with unlimited minting. In other words, if someone had enough of spare time to mint Cryptopunk back then, they could bring home a dozen of Cryptopunks and accumulate generation wealth.

The most expensive Cryptopunks ever sold in history (for now)

In fact, wilcox.eth, the CEO of Electric Coin Company, also one of the inventors of Zcash, has a whooping 238 Cryptopunks living in his wallet. Assuming one Cryptopunk equals to 70 ETH (~USD$126,000), this NFT Collection alone bags him at least USD$30 million. You may check his wallet out here:

https://etherscan.io/address/0xa25803ab86a327786bb59395fc0164d826b98298

Ranking of Cryptopunks holding in a single wallet

2. Social Status

Owning a high value NFT not only can show your social status, but it also empowers what you say or tweet. Crypto enthusiasts are very particular about reputation and status, the speech of an 'OG' (Original Gangster) will always gain more traction than an ordinary individual. To obtain an OG status, besides grinding in the crypto scene for years, one could just pay his or her way by acquiring an OG or blue-chip NFT as their profile picture. To make it simple, OG NFTs grant you the highest social status, while blue-chips serve as an entrance ticket.

Example of OG & blue-chip NFT projects

The OG NFTs holders, notably Cryptopunk and Bored Ape Yatch Club (BAYC), has the highest level of credibility. Of course, it doesn’t mean what they say are always right, though audience tends to give them benefit of doubt whenever contradictions arise. If someone is willing to spend nearly USD$200,000 on a digital JPEG profile picture, there’s got to be something, right?

3. Metaverse

Last but not least, the ‘Metaverse’! Thanks to Mark Zuckerberg, the CEO of Meta Platforms which was previously known by the name of Facebook, single-handedly bringing this term alive to the rest of the world.

Search interest of ‘Metaverse’ spiked right after Zuckerberg’s announcement

Metaverse is not a new term invented recently, in fact, it was originated in a science fiction novel titled ‘Snow Crash’ back in 1992, as a portmanteau (blend of words) of ‘meta’ and ‘universe’. The metaverse is a virtual interoperable universe shared by users around the world. According to Zuckerberg’s word, we can do almost anything we can imagine in the metaverse, there should be no constraints on physical, time and space. Metaverse in overall, has a strong plot that could tell a great story.

To avoid missing out on a once in a lifetime investment opportunity, investors are eyeing on any project that are related to metaverse. Demand creates it own supply, every NFT project since then is telling you about metaverse this and metaverse that. The price of virtual land cryptocurrencies and NFTs soared several folds within a few days after the announcement. Well, most of them are almost back to square one as the market is cooling down.

Price movement of $MANA, one of the metaverse virtual land cryptocurrencies

Despite the stock market and crypto keep crashing, the NFT market is far from dead, according to DappRadar’s analysis. (Read: https://www.blocktwits.com/news/detail/?id=6384)

NFT enthusiasts are still engaging in community, discussing about new projects, and making good money. In the span of three weeks, we had goblintown.wtf, ill poop it nft and WAGDIE, these 3 projects created a phenomenon in the NFT scene, most people are enjoying it. Invest in a good NFT project not just bringing us wealth, it entertains too. However, there are many traps and hoaxes in the world of NFT, it requires a depth of experience to identify a legit project. Always remember to dig into the community, research the team, invest only what you could lose and never go all in.

Written by: [Coinlive] Nell