NFT Price Crash Stirs Debate on Whether Stimulus-Led Fad Is Over – Bloomberg


Prices for digital collectibles like art and sports memorabilia are sliding, turning the focus back on whether the nascent market for so-called non-fungible tokens is any more than a fleeting mania.

Average prices for NFTs — essentially tradable digital certificates that use blockchain technology to prove ownership and provenance of online assets — have tumbled almost 70% from a peak in February to about $1,400, according to Nonfungible.com, which tracks a variety of NFT marketplaces.

A burst of interest in NFTs hit a peak last month when a digital artwork by Beeple sold for a staggering $69.3 million. For some, that sum showed NFTs were in the grip of investor excess in a world full of stimulus, and destined to fizzle. Others who study the technology argue the use of blockchain to create scarcity for digital collectibles is a lasting innovation rather than a price fad.

“It’s not meaningful to characterize a concept as a financial bubble,” said Chris Wilmer, a University of Pittsburgh academic who co-edits a blockchain research journal. “‘NFTs’ aren’t in a bubble any more than ‘cryptocurrency’ is a bubble. There will be manias and irrational exuberance, but cryptocurrency is clearly here to stay with us for the long term and NFTs probably are too.”

Punctured

NFT boom fizzled as prices cooled from a February peak

Source: Nonfungible.com


Blockchain-based digital asset sales were already underway in 2018, when 10 collectors paid $1 million for a digital picture of a rose. Today, tweets, baseball clips and even comical digital characters are also traded as NFTs.

Read More: Crypto Investor Moves On to Picasso After $69.3 Million NFT Miss

Read More: Digital Art Mania Subsides After Breakout Month of Sales

Companies are looking to expand applications of the technology. While digital art is “frothy,” music and film may provide viable NFT ventures, said Kathleen Breitman, the co-founder of blockchain platform Tezos. There are even queries emerging about lending against NFTs, she said.

Researchers have also begun looking into whether NFTs have low correlations to other investments, including cryptocurrencies like Bitcoin, hinting at a potential if highly controversial role in portfolio diversification.





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