NFTs are dead…
For the third month in a row, NFTs are down bad, people are down bad, the macroeconomics are down bad, and there is a recession knocking on the doorstep. We even have a new contagion outbreak in Africa(FML). Life is simply down bad. As an observer on the sidelines it’s actually quite sad to bear witness to the current state of NFTs and CT (Crypto Twitter) hell, even the shillers aren’t shilling anymore, in fact, they are selling their accounts….yikes. Let's take a look at some of the facts and sentiment that is permeating the industry.
The Facts
One of my go-to tools is google search trends and if you aren’t familiar with it, now is the time to learn. Google Trends displays search interest in topics over a period of time. Sounds simple enough. Let’s see how this applies to the phrase “NFT”.
The meteoric high that was hit in early January has steadily dropped by 80% as of July. From June to July interest dropped by 5% further fueling this horrific downtrend and the ever-burning question “is the bottom finally in”. Crypto veterans have experienced a few crypto winters depending on how long they have been trading. This, however, is arguably the first NFT winter and the data does not lie.
For the first time this year, there has been an inversion of the curves between profits and losses of resold NFTs. If this trend keeps up into subsequent quarters trading NFTs will no longer be a profitable activity. Combine that with an existing issue around “NFT mint fatigue”. Did you say “mint fatigue”? Yes, yes I did. Mint fatigue put simply is burnout from the minting process. We didn’t get here overnight, but the culmination of farming allowlists, which involves riding hype trains, making memes, fake engaging in discord, solving complex puzzles, and winning RNG-based games, has created a burnout effect dubbed mint fatigue.
Liquidity is drying up. There is an overarching fear that if you mint you won't be able to sell. This has caused many mints to stall out in some cases not even 100 sales into the launch and the show is already over. This fear is what I truly believed to be the catalyst of the free-to-mint creative commons 0 rights reserved meta that produced projects like Goblintown.wtf and the countless derivatives since. The risk is small if you are minting from an optimized contract the most you would spend is up to $12 gas fees minting multiple NFTs and if the project flops you only lost the gwei. It gave traders a ‘chance’ to flip, hold, or trade and filled the bearish souls with a little bullish hope, for a bit. What goes up must come down and so has the free mint meta. For every 100 projects hit maybe one truly has take-off potential. If you look at the chart below you can see why.
Coinciding with the inverse of curves with profits & losses. You can see in black & white that the selling pressure is out demanding the buying pressure. The lack of buyers creates a snowball effect of price undercutting as sellers race to exit at whatever price they can with many projects going to zero. At least you were buying it for the art….right…
The Sentiment
Much like coping with the loss of a loved one. Many are going through the stages of grief as relates to the end of the NFT bull cycle. For those of you that are unfamiliar with the stages of grief, they are denial, anger, bargaining, depression, and acceptance. Watching the tweets that have come from retail and influencers you can’t argue that everyone is coping in some kind of way. Just take a look at a few of the tweets below.
I know this is just three screenshots and represents a horrifically small snapshot of the overall sentiment. That being said, I can scroll through our Twitter feed every day and find tweets along these lines. Eight months ago it would have been impossible to do so. The cope meme culture is even at an all-time high. With images of Pepe hooked up to a copium tank of gas circulating everywhere and even being the catalyst of meme culture coping NFT projects like Copetown. I challenge you to scroll through your Twitter timeline and see if you can find a tweet of someone coping and link it in a comment below.
Even institutional media personalities like Jim Cramer are pretending like they didn’t fully endorse crypto less than a year ago, unfortunately, for him, the internet never forgets. Just look at the 4k footage below.
Major publications are out for blood too just look at Forbes. Earlier this month they dropped an article calling this NFT’s first crypto winter. Bloomberg has also jumped on the NFT winter hype train with their soft hit piece. I am certainly no expert but last I checked 1 + 1 = 2 and I am sitting here doing the math and still getting the same answer.
The Light
It can’t be all doom and gloom, right…right?
Gary Vee called an NFT winter back in November ’21 citing short-term financial interests and greed as the primary catalysts for it. He even mentioned that it was very similar to the dot com bubble pop in the late 90s. Much like the dot-com bubble, most companies failed, but a few survived and they have become household brands we couldn’t imagine our lives without, i.e. Amazon. Personally, I believe that Gary Vee couldn’t be any more accurate with his observation. Now that the bear cycle has hit the market it gives it the opportunity to mature and learn from the mistakes of the previous bull cycle.
Weeding the garden of predatory behavior and copypasta projects with different art is a must. The UX on most chains, dapps, exchanges, wallets, and contracts still need to improve for mass adoption. This has opened the doors for builders to build and a very common expression being thrown around lately is “builders build in the bear” and “if you survive the bear you set yourself up for the bull”. There is an air of hopium even though we are all still down bad across the micro and macro.
So, are NFTs dead? At the moment, yes, but will it remain that way forever? No, I would find it very hard to believe NFTs will fail. Far too many talented people made the leap into web3 after the last bull cycle. Everyone that is still here has the same conviction, that NFTs can continue to and will replace countless ways we interact with mechanisms in web2. That they will eventually become part of everyone’s daily life in one way or another. If you are down bad right now, remember you are still early, keep building, and see you all on the moon next cycle.
If you made it all the way to the end of this article please share down below your experience over the last three months in NFTs. What have you observed? Can the market recover? Will NFTs ever be adopted at a mainstream level? What needs to change about NFTs and the blockchain? I look forward to hearing what your thoughts are.
