NFT: The gamble of “missing” millionaires

Tram Ho

Since last month, when non-fungible tokens (NFTs) became the alternative to meme coins and countless other cheap coins in the speculator’s portfolio, Zuppinger’s website added 169 collections – more than the previous 12 months combined. If you think they have an investment advantage that could make themselves the Warren Buffett of the crypto world, the COO of Nonfungible.com has a “soft” warning: ” Probably 90% The number of collections created today is completely useless and meaningless “.

Last week’s $24 million gorilla token auction by auction house Sotheby’s, the Doge meme sold for $180 million, and many of the surreal products that popped up during the NFT wave this past summer… all of them gives us a mixed picture of the ” get rich easy ” opportunities from the NFT. But the data compiled by Bloomberg shows that this market is not as rosy as we think.

Only a very small part of this community, and some extremely lucky or well-informed people, get rich, ” said Zuppinger.

One of the most common outcomes NFT investors encounter: selling off something no one wants. During the last 90 days, nearly 1.9 million properties were for sale on the world’s largest NFT marketplace, OpenSea. But three-quarters of them have never been handed over in any transaction.

As for the things that do find a buyer, they are almost always high-value and famous works. 3% of the most traded NFT assets account for 97% of total trading volume.

That active part of the market saw strong waves of bears, but the subsequent profits were not as enticing as you might think. Among NFT assets with at least 100 transactions, 42% experienced an average drop in value, while 39% experienced a double or more price increase (note that the data is collected from the public application programming interface). OpenSea’s declaration excludes some collections such as CryptoPunks and ZED RUN).

NFT: Trò may rủi của những triệu phú “hụt” - Ảnh 1.

NFT CryptoPunks Collection

At this point, with trading volume already plummeting after Bitcoin’s plunge last week, the question is whether this speculative bubble will follow the path of previous phenomena: Entering the market late will pay off because the madness has begun to go in the opposite direction.

NFT is not the only hot market with dozens of “huge” assets, countless ambiguous pitfalls, and rich traders who loudly claim to have the market in the palm of their hands.

But even without any obvious economic value, NFT is still different from other speculative movements of the past time. Anyone can create a token with the function of “stamping” the sole ownership of an asset on the blockchain.

Some NFTs are simply popular, ” says Benjamin Rameau, founder of a decentralized organization dedicated to investing in NFTs called Jenny DAO. ” What the market considers valuable is sometimes determined by odd factors.

The inherent feature of this game is herdity. Martin Gaspar, an analyst at crypto firm Crosstower Inc., briefly sold a digital portrait from a collection of Hashmasks and made around 40% profit in just two weeks in February of this year after observing the trends. direction on Twitter. He realized that now, NFT fans are also monitoring Discord and Telegram groups for similar trading signals.

But where do those signals come from? Last week, OpenSea reported that it had discovered an employee using confidential company information to pre-purchase NFT assets before they appeared on the homepage.

People are trying to get in the big game before it gets too popular, ” says Gaspar. “ If there are a lot of influencers in the crypto world talking about an NFT project, it’s usually a good idea to listen, or at least do a bit of research.

Proper pricing for pandas, vampires, or virtual eggs is so difficult for most speculators that it becomes a rare opportunity for “algorithmic” traders. who offer great deals on a wide range of works in the hope of luring “naive” sellers. At this point, their bot team can immediately resell the tokens at a higher price.

When Bitcoin’s value plunged 17% on September 7, the liquidity of the NFT market also “lost brakes”. Since then, the price and volume of NFTs have plummeted. The floor price of Loot (for Adventurers) – one of the hottest collections of the time – or the price of the cheapest piece in this collection, has nearly halved. Compared to the record time, Loot’s value has decreased by 54%.

Every two hours, there’s an NFT sale, ” Rameau said. ” There’s no way you can maintain the price of those collections.

NFT: Trò may rủi của những triệu phú “hụt” - Ảnh 2.

Total value of NFT Doge is up to 705 million USD

Like the crypto world before it, the NFT also suffers from the problem of wash trading, in which speculators seek to drive volume up by colluding to buy and sell an asset. Zuppinger and Dan Kelly, the two founders of Nonfungible, discovered that from May 2020 to February 2021, such fake transactions accounted for 28% of total fiat volume on an unnamed NFT marketplace, and 10% of other transactions marked as suspect.

Reduced liquidity and unpredictable prices are the result of limited supply, leaving some collections in the hands of whales, or holders of extreme amounts of assets. big. In the case of CryptoPunks, for example, the 100 largest holders on the market now hold almost half of the pieces in this collection.

One solution to the liquidity problem is to split NFTs into fungible tokens that represent part of a much-loved piece. That would make trading easier, and could bring NFT symbols like the Doge meme to a wide audience, but it would also cause over-excitment in the market: when people used to buy That photo for $4 million publicly auctioned it as…17 billion pieces earlier this September, the total value of this NFT jumped to $705 million!

99% of success lies in being in the right signal group, getting the right information, at the right time ” – according to Zuppinger. ” In the NFT world, you have to constantly live with the frustration that you just missed your chance to make $1 billion.

He is the one who understands that best. When CryptoPunks were worthless in 2017, Zuppinger viewed them as an experiment with very little artistic value. But just last week, a token of it was sold for up to … 7 million USD.

Reference: Bloomberg
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Source : Genk