- 1 Non-fungible tokens (NFTs) took the last possible seat in the priority order of digital asset enthusiasts, numbers show.
- 2 The crypto winter might end up affecting NFTs the most, in a way.
Crypto winter is as old as cryptocurrencies themselves. After all, the crests and troughs, or boom and bust are now a well known patter in economies. For the several initial winters, Bitcoin (BTC) was touted as a mere short term phenomenon, but it survived and came out winning every time. The last crypto winter during 2022 was more or less the same – most assets dipped to their lows, and some even vanished. Though digital assets are recovering, NFTs might have a similar fate.
The notion that “NFTs are dead” is getting voiced at a larger scale. The broader crypto community does not hold the similar passion and enthusiasm for NFTs as they used to during its boom in 2021. Looking from a broader perspective, it does happen with some digital assets every winter. And this time, non-fungible tokens met an evil fate.
It’s not surprising for those who have been involved in the crypto space for a few market cycles. Many of the ICO tokens from the 2017 bull market era became defunct during the 2018/19 bear market. Similarly, numerous DeFi protocol tokens that gained popularity during the DeFi summer of 2020 also faced challenges and some have ceased to exist. This pattern of boom and bust is a common feature in the cryptocurrency industry.
In the current crypto landscape, there are over 1.8 Million tokens with a combined market capitalization of slightly over $1 Trillion. However, a significant portion of this value is concentrated in the top 10 largest protocols and tokens, which collectively make up more than 93% of the total market capitalization. This highlights the substantial dominance of a select few in the cryptocurrency market.
The barrier to entry for creating an NFT project with the hope of achieving financial success has been relatively low. Almost anyone can, and it appears that many did, create an NFT collection with just a few minutes of effort and a few keystrokes. This accessibility has led to a proliferation of NFT projects in the cryptocurrency space.
NFTs saw massive capital inflow at its peak, with the valuation reaching double-digit Billions (USD). Today, the broader NFT sector is looking at the highs it attained from a level very much down below. A large number of these digital tokens today are said to become worthless.
The picture seems gloomy and devastating for broader NFT market, but is it actually this bad? Again the optimistic view is that the current state is a refinement phase for the non-fungible token market. Essentially, this phase would see the elimination of “worthless” items hogging space in the name of “digital art” and making way for actual, worthy, and valuable assets to enter the market.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.