The NFT question
Cryptocurrencies have collectively taken a tumble over the past few weeks, but some sections of the economy have been hit harder than others. Stablecoins, in particular, are looking awfully unstable.
Are NFT markets next? That’s what some are wondering, after trade volume and NFT prices have declined significantly on average since their peak last year. If the NFT market crashes, the consequences could be huge: Lots of new buyers entered the crypto economy last year via NFTs, which insiders pitched as a fun way to experiment with crypto. If they feel burned by a serious decline, it could take a long time to bring them back into the fold.
The NFT market looks vastly different now. Last year’s NFT boom was one of the biggest crypto stories. The snapback could be one of 2022’s cautionary tales.
Morgan Stanley is predicting an NFT crash. A recent report said bitcoin’s fall can’t be blamed just on tumbling tech stocks, and other parts of the crypto market are being tested too.
NFTs made it from the fringes of the internet to the front page of The New York Times last year. That brought a lot of normies into the fold.
That’s still a big “if”: The NFT market, though wobbly, hasn’t evaporated like, say, luna. It helps that NFTs aren’t, well, fungible: Projects that center around well-executed artwork, a thriving online community, a fun game or an existing fandom like sports could survive a broader shakeout. Eddy Lazzarin, head of Protocol Design and Engineering at a16z Crypto, observes that “volatility has been the norm for NFTs from the beginning.” But even that, he noted, could change. Maybe a shakeout will lead to stability.
— Veronica Irwin (email | twitter)
