The NFT market hasn’t recovered. But they’re still bullish on the tech

By David Silverberg

January 11, 2024

When Adam Greenbaum started buying NFTs in 2021, pretty much as soon as he learned of their existence. “I always wanted to be an art collector,” he says, “and this seemed like a cool thing to get into that wasn’t as expensive as being a fine art collector.”

Greenbaum, who works as the CMO of veterinarian SaaS startup Petvisor, says he’s always been an early adopter of new technologies, and with NFTs and crypto he was keen to join a craze he saw as thrilling and lucrative. He bought Alien Frens art pieces, some real estate in the metaverse, and, most staggeringly, spent $37,000 on a Bored Ape NFT.

But like many other NFT collectors in the past two years, he’s watched his NFT investments plummet in value. He spent close to $70,000 altogether on NFTs; he estimates their worth is about half that figure today. (If it’s any consolation, he at least fared better than the NFT of Twitter CEO Jack Dorsey’s first ever tweet, which sold for $2.9 million on OpenSea in 2021 and is going for $350.)

Bur rather than cutting his losses and selling off his digital assets, Greenbaum is holding pat. He didn’t even budge when someone offered $15,000 for his Bored Ape NFT—less than what he paid, but still an impressive sum. “I’m willing to risk that $70,000 investment and hope for a bounce back in the Bored Ape market,” he says.

For now, at least, the market’s outlook remains grim. A 2023 report from crypto analysis firm dappGambl found that 95% of NFTs are worth practically nothing. The report found that, following the immense hype over NFTs between 2021 and 2022, around 79% of all NFT collections have remained unsold.

The SEC has issued several rulings on shady NFT offerings, such as their August 2023 statement on Impact Theory’s NFT collection that were “sold to investors as investment contracts and therefore securities. Accordingly, Impact Theory violated the federal securities laws by offering and selling these crypto asset securities to the public in an unregistered offering that was not otherwise exempt from registration.”

In 2023, the number of NFT sales dropped to a jaw-dropping level. At its peak in that year, January 5 saw a sales volume of 18,939 on that day and by December 20 that number cratered to 1,796, according to NonFungible.com’s market tracker.

These tradeable assets were supposed to fatten the wallets of those who invested early, while also pouring money into the pockets of digital creators—people like Dmitri Cherniak, whose “Goose” NFT sold for $6.2 million at a Sotheby’s generative art auction, and Beeple’s HUMAN ONE, which sold for $29 million on the blockchains and marketplace OpenSea. For a while, it seemed like every celebrity, from Paris Hilton to Donald Trump, was selling an NFT collection.

“The tulip mania is now over,” says Domenic C., a Toronto-based NFT collector who declined to give his full name to Fast Company. “Always at the end of these bubbles someone’s going to be left holding the bag.”

He likens the NFT fracas to the 17th century-era craze over Dutch tulip bulbs—when prices for the flower reached an average of 5,000 guilders and then sunk to around 50 guilders three years later.

 

Domenic didn’t stake too much money into NFTs, which he bought on marketplaces such as SOLANA, ETH, Songbird, XRP, and BNB. He notes the value of all his current NFTs are down from 500 XRP (the crypto used to purchase them two years ago, or $258 in today’s USD) to around 100 XRP today.

Domenic says he was always skeptical about many of the NFT projects, even when the market was booming. “I would hear ‘Buy this NFT and get 45% yield when you stake it, and then use it in our upcoming video game and also in the custom metaverse we are creating,’” he says. “Then two months later it would be, ‘Hey everyone, it turns out building a video game is harder than we thought so we are pivoting to trading cards.’”

Still, he remains overall bullish on the market. “As a long-time gamer I can attest to the value of digital goods,” he says. “That sword you bought after over 100 game hours with a team of 40 people braving the depths of the molten core, well, that sword has value, especially if you are able to take that sword outside of the game world into a marketplace.”

Domenic also is optimistic about the rise of NFT in other contexts. If you buy a concert ticket online, he explains, each ticket holds a unique ID that can’t be replicated. “You buy the ticket and receive it as an NFT in your wallet, and you can now resell the ticket or use the ticket,” he says. “During the day of the concert you walk in and scan your ticket and now that the ticket has been flagged as ‘used,’ it changes in your wallet to a collectors’ item.”

For Amy Whitaker, author of The Story of NFTs: Artists, Technology, and Democracy, she isn’t as concerned about the ebb and flow of the value of NFTs as their wider impact. “We may think about NFTs as a speculative bubble but actually the structure of how NFTs are sold is so much more interesting and instructive,” she says. “It’s also transformational to see how artists may gain new avenues of financial support from automated royalties unique to the NFT market.”

Jacob Jackson, a technology writer in Michigan, is similarly hopeful for NFT’s upswing. He’s bought more than 100 NFTs for around $1,000 in total and notes several of them have increased in value. But he hasn’t been quick to offload those that have declined in value. He says in an email, “There are many NFTs that I own that are considered worthless in the current market and I do not see this as a loss as I made up for the worthless NFTs with those that are selling actively in the market. This does not bother me as the market is still very new and as new buyers enter the space there is room for older, ‘worthless’ NFTs to make a comeback.”

While it may be difficult to identify what triggered the crash, the fall in demand—spurred by a slump in the cryptocurrency market—has wiped billions from the combined value of all NFTs in circulation. Posts on LinkedIn about the dappGambl report were met with snide comments—for example, one user wrote, “Duh, obviously the NFT hype was just that, all hype and speculation.”

Still, that doesn’t trouble collectors such as Caravaggio. “The ones I may tend to aim for these days have some kind of legal framework worked out,” he says, “and I do have several game and project NFTS that can be used in the real world for merch and other content that I would have full rights to.”

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