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- 1 The report prepared by a group of JPMorgan analysts expressed cautious sentiments regarding the recent recovery in DeFi and NFTs.
- 2 After nearly two years of slowdown, both the NFT sales volume and DeFi total value locked have shown recent increases.
The cryptocurrency market saw one of the dreadful crypto winters last year triggering the fall of the Terra (LUNA) network fall. Almost every other sector got a hit due to the bearish trend, the broader decentralized finance (DeFi) and non-fungible tokens (NFTs) sector was no exception. Prominent banking services firm, JPMorgan, recently painted a picture of the current state of DeFi and NFTs, which is not colorful.
The report prepared by a group of JPMorgan analysts led by Nikolaos Panigirtzoglou, released on November 29, 2023, expressed cautious sentiments regarding the recent recovery in decentralized finance (DeFi) and non-fungible tokens (NFTs), suggesting that the positive signs observed are still tentative and not conclusively indicative of a strong resurgence.
While acknowledging the recent upswing in DeFi and NFT activity as a positive development, JPMorgan emphasized the need for prudence. The report stated, “While we do not doubt this recent revival in DeFi/NFT activity is a positive sign, we believe it is too early to be getting excited about it.” The analysts pointed out that these signs represent “only tentative signs of revival.”
After nearly two years of slowdown, both NFT sales volume and DeFi total value locked have shown recent increases, prompting a degree of optimism. However, JPMorgan remains cautious about prematurely interpreting these developments as a robust and sustained recovery.
The report highlighted that the optimism is based on “some recovery in DeFi,” attributed to increased crypto trading activity and the influence of decentralized exchanges. The analysts also noted that liquid staking, particularly led by platforms like Lido, has been contributing to DeFi improvement since early 2023, preceding the recent buzz around potential spot Bitcoin ETF approval.
Ethereum Has A Role to Play in Price Dynamics
The report shed light on the price dynamics of Ether, stating that it has underperformed relative to other cryptocurrencies. This underperformance has implications for measuring total value locked in Ether terms. The analysts explained that the mechanical impact of rising prices in several smaller cryptocurrencies, outpacing Ether’s gains in recent months, contributes to the appearance of a revival when measuring total value locked.
In summary, while acknowledging the positive trajectory in DeFi and NFT activity, JPMorgan advocates caution, considering these developments as early and potentially fragile signs of recovery.
The report suggests that a more sustained and conclusive rebound would require careful monitoring and evaluation as the DeFi and NFT landscape continues to evolve.
Gloomy Picture of the NFT Market
Earlier TheCoinRepublic reported that the comprehensive analysis conducted by crypto gambling platform dappGambl, covering over 73,000 NFT collections, has unveiled a stark reality – a significant majority of these collections hold negligible value, leaving the vast majority of users with minimal to no profits on their investments.
Out of the extensive pool of 73,257 NFT collections examined, a staggering 69,795 collections were found to possess zero dollars in market capitalization. This implies that a substantial portion of NFT holders, numbering in the millions, are facing the challenge of seeing little to no returns on their NFT investments.
The study also highlighted that only 21% of the existing NFT collections have been traded, implying that a significant portion of NFTs has never been sold. Among the top trading NFT collections, a noteworthy 18% had no floor price, indicating no minimum trading value. Approximately 41% of these collections had floor prices ranging from $5 to $100. In contrast, only a fraction, less than 1%, boasted a minimum trading value exceeding $6,000.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
