Has the NFT Bubble Burst?

It appears that NFTs turned out to be nothing more than a passing trend.

Hand trying to touch a hologram

Photo: Rawpixel

LatinAmerican Post| Juan Manuel Londoño

Escucha este artículo

Leer en español: ¿Se reventó la burbuja de los NFT?

The NFT market is entering a crisis that for some comes out of the blue and for others was completely expected. The most popular application of cryptocurrencies took the world by surprise in 2021 and in this year little or nothing has been heard of this "revolutionary" technology. Here we show you a few news that show the scope of this crisis.

Collapsing Sales

It is a reality, the average price of an NFT and the number of daily sales of NFTS has been collapsing since the beginning of this year. Although the exact reason is unknown, these numbers are on the decline.

According to Fortune magazine, the average selling price of an NFT is now less than US$2,000, while in January this year it was around US$6,800. Daily NFTS sales have also dropped, from US$160 million a day in January to just US$26 million on March 31.

Axie's Billionaire Collapse

Perhaps one of the most prominent signs of the imminent collapse of the NFT market is the multimillion-dollar heist that occurred a few days ago in the video game Axie Infinity. This video game, for those who don't know it, is perhaps one of the biggest video games in the world based on the acquisition of NFT's.

On March 23, the lack of security in this technology was exposed when a single hacker, using a single computer, stole more than 620 million dollars in ether, the cryptocurrency on which the game is based. Without going into details, this is the largest theft in the history of decentralized finance, the term used to designate transactions that take place on the blockchain.

But the problem is not that the hacker has managed to steal these millions, it is that its users have no way of recovering that money. Considering that the vast majority of them were people from developing countries, who used gambling as a job to support themselves, it is worrying that their money has disappeared and they have no recourse to get it back. Your tokens that were worth hundreds or thousands of dollars today are practically worthless.

Although the company in charge of the game, Sky Mavis, has raised 152 million dollars to reimburse its players, this money comes from outside investors and it is unlikely that the lost 600 million will be recovered.

Also read: How could the purchase of its shares by Elon Musk affect Twitter?

What is causing this phenomenon?

Frankly, the over-saturation of the market, due to the very versatility of NFTs, has been a major factor in reducing their popularity. As they can be anything, few except the very tech-savvy see any real lasting value in them. The excess of scams and the lack of security for users has also turned people away, who are a little more skeptical of these investments.

Finally, it is worth mentioning the trend factor. In the middle of last year, NFTs were a new and revolutionary technology, something that was going to revolutionize the market, a trend that everyone wanted to participate in. Over time, its luster was demystified and people became interested in other topics, such as the conflict in Ukraine. You only have to see the trends of the word NFT in Google Trends to know that people are no longer interested in this technology.