cryptocurrency

The fate of NFTs in the crypto winter

  • The sharp increase in crypto assets in 2021 only foreshadowed a sharp decline in asset prices.
  • NFTs, especially technical ones, only started gaining popularity in 2021.

If 2020 and 2021 are the fall and summer of cryptocurrencies, then 2022 is clearly the winter of cryptocurrencies. For people and assets who have gone through the crypto winter, this winter is nothing special. It might be expected somehow. The Crypto assets skyrocketing in 2021 It just means that there will be a severe drop in asset prices.

There is one class of crypto assets that has not gone through the crypto winter before. NFTs, especially from the art variety, just got Popular in 2021. Ergo, so far, the NFT market hasn’t seen any kind of crypto winter. What this means is that we didn’t know how the market would react to the drop in cryptocurrency prices. Would it be more difficult than coding in general? Will the prices remain stable or will they be linked to the prices of some tokens? Nobody can tell. but now? It seems we have our answers.

Immediately, we can say that NFT prices have not remained stable. Prices fell quickly. Even premium assets like Bored Ape Yacht Club have witnessed Half prices. However, in the same vein, some assets have experienced growth spurts.

One might argue that all of this was obvious. After all, NFT is basically just some kind of encryption token. But there were many reasons to believe that NFTs would fare better than cryptocurrencies in the market.

For one, NFTs represent a different class of assets. While people buy coins for financial reasons – which means they also sell for financial reasons, people buy NFTs for emotional reasons instead. Many of the most valuable NFTs have dedicated communities that are not necessarily concerned with the price of the asset, but rather with the community and the access it provides for them.

Someone, for example, might not buy a boring monkey because it might have a high resale value, but because a celebrity they like has one. It’s the same for many other NFTs, especially those written by beloved celebrities and artists. Just like traditional art, NFT purchases are often influenced by a combination of financial and emotional reasons.

Another reason people expect crypto winters to have a difference in NFTs is that NFTs, in general, have a much higher barrier to buying. With tokens, you can download a wallet app and buy a coin from a central exchange.

But with NFTs, you first have to buy coins with the exchange’s native currency before you can buy NFTs. What this means, at least in theory, is that there will be fewer concerns in NFT purchases, which could translate into flexible pricing in the long run.

Unfortunately, all of these assumptions are proven wrong as do NFTs Just as bad as cryptocurrency tokens.

What now

For investors who thought NFT prices would have more flexible pricing, realizing they were wrong may be sobering. But it doesn’t have to be. The fact that NFT assets behave, essentially, like crypto assets means that their behavior is predictable. And predictive behavior is a great friend in turbulent times.

Oddly enough, things could be worse for NFTs when one views them as crypto assets. While many NFTs have not experienced a devastating decline in value when they are denominated in their native currency, the picture begins to appear radically different when one thinks of the beating that the original coins themselves are taking in the market.

For example, NFTs like BYAC are down only 52% compared to the peak price of ETH, but legally speaking, they are down almost 80%. The same is true for many other NFTs such as Moonbirds and Mutant Ape Yacht Club (MAYC).

Interestingly, investors who consider the value of their portfolios in terms of the network’s native currency rather than the underlying fiat currency, may not be subject to phased market fluctuations. These investors are in the right position to make the most of the appreciation of their coins when the market finally turns.

Now that we understand that NFTs are not immune to the movements and tremors of the cryptocurrency market, it is important to plan with this assumption. This means treating NFTs like crypto assets while running bears.

While bear flows are undoubtedly financial disasters, they can also be great for the long-term health of an ecosystem. During the revolutionary race of NFTs, everyone and their aunt released the NFTs. Everyone did everything to get NFT listed on Opensea – even when they didn’t have a thriving community or use case. But as the hype lifts all boats, many of these poorly thought-out projects have been raised, despite their lack of important basics.

This led to an ecosystem where projects with strong fundamentals had similar offerings to those without. The bear market is already putting an end to it, as many lackluster projects are already on their way to giant 0. This pattern could continue much throughout 2022 and even gain momentum in early 2023. When the bull market finally returns, projects that will be left after the tsunami This winter will be solid projects. They will be projects that have proven their strength by standing strong, even during a bear market.

This brings us to another point. If an uptrend leads to horrible projects with bad fundamentals that have reached peak prices, does that mean that a downtrend will lead to the opposite? The answer to that is most likely yes. Bear runs don’t inspire a “rug puller.” The projects that are coming online now are projects that are ready to face the harsh conditions of the market. The fact that the teams behind these projects are ready to launch during a bear market only means one thing – the fundamentals are very solid. Of course, this is not always true and it should not be a golden rule. But if you are looking to invest in NFTs or cryptocurrencies, this is one of the factors you should consider first. projects like Cryptokens nowFor example, they were born in a bear market and have unusually strong fundamentals. They can trade at the lowest level ever in this market.

In the end, the only thing you can do with NFTs during a bear market is what you do during all of the bear markets. You buy projects that you think are trading at a discount, because a lot of them are. Then wait. This simple, yet winning strategy has worked with ciphers per bear cycle, and there’s no doubt that it will work with NFTs. After all, they both react similarly to the price movement in the market.

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#fate #NFTs #crypto #winter

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