A Market In Chaos

One year ago I was writing about a market which would soon become a multi-billion dollar industry: profile picture NFTs.

It sounded absurd just writing it but here we are a year later and that prediction has not only come true but it surpassed the wildest of expectations. NFTs as a whole surpassed the global art market in volume last year.

Yet now we find ourselves suffering from a crypto bear inflamed by the possibility of rampant inflation, global instability, market volatitlity, and an overall shift to risk-off mode. This weekend we saw the price of ETH collapse 30%.

Despite some Wall Street analysts who believed Bitcoin may serve as a hedge against inflation we are instead seeing a repeat of the COVID market capitulation. The everything bubble has popped and so too crypto and NFTs.

So where does that leave us?

I have long been stating that I think Bored Apes will drop to $50k. That seems absurd given that they were as high as $450k only a few weeks ago but paying so much for a JPEG and access to a couple of parties doesn’t exactly seem reasonable.

How low they go is anybody’s guess but in a market where people are looking to fight inflation, expensive NFTs don’t seem like a safe asset. But is the NFT market headed for death?

So far we have seen have seen NFT volume drop by 90%. Yet the remaining 10% amounts to a $7.2 billion annual pace of NFT sales which is incredible for a market that barely existed two years ago. I could not be more bullish about this market over the long-term.

250,000 people are still actively trading NFTs compared to a few thousand less than two years ago. That may dip some in the short-term but there is a new cohort of consumers who enjoy collecting these digital assets. Like the internet bubble though, inflated prices preceded widespread adoption.

In the interim, any further crypto price capitulation will suck up NFT liquidity and prices will correspondingly implode. However there is a lot of cash on the sidelines waiting to hop back in. No matter which way this goes it’s exciting.

The best trade is often no trade and that’s where we are at today. Continue developing your watchlist and and look for deals. This market isn’t going to just bounce back up to where we were. Maybe a short-term relief rally but nothing more. It’s build time!