NFTs are considered “dead,” with some collectors already cutting their losses. I looked into what influences this sentiment and whether there is any chance of a rebound.
The phrase “NFTs are dead,” although expressing a bearish sentiment, has become a cliché. Resulting from the significant drop in interest, trading volume, and prices within the NFT space. But it wasn’t always this way; NFTs weren’t always primed for death. In fact, NFTs were at one point championed by maxis who believed they would have limitless “utility.”
So what changed?
Let’s look at events that contributed to the idea that NFTs are dead.
What once prompted the rise of NFTs eventually led to its demise. While it was optimistic to expect NFTs priced near zero to soar to double or triple figures in ETH (which we did see), such trends weren’t always sustainable. Speculation drove people to buy and sell based on market perception rather than real fundamentals. It is no wonder that even the “most promising” NFTs saw declines of up to 99%. A situation that placed NFTs in similar fate to meme stocks.
This is a case of chasing rainbows where there’s no pot of gold. The earliest examples of NFTs, like CryptoPunks, were part of a broader trend of experimental digital art. The idea was to explore new ways of creating and valuing digital works. These artworks were initially distributed freely but later gained sentimental value, peaking as high as 125 ETH.
NFTs naturally evolved in this direction. With newer experimentation, some NFT collections began to incorporate real-time utilities into these digital artworks. In a short time, other communities from existing collections started to demand similar utilities. This caused problems for collections that could not meet up with such demands, as they were not originally designed for this purpose. This situation led to panic and uproar within the NFT community, causing holders to seriously question whether it was worth continuing to hold onto these digital assets. As you’d expect, many collectors dumped.
As the NFT market surged, it drew the scrutiny of regulators wary of issues like fraud, market manipulation, and intellectual property rights. The absence of clear regulations and the looming threat of stringent future rules created a minefield for investors. With established marketplaces like OpenSea feeling the SEC’s heavy hand, this regulatory uncertainty has been nothing but a chill wind, deterring new investors and fueling the negative sentiment surrounding NFTs.
NFTs are not dead. Recent data suggests there’s a case for NFTs to rise from its current slump — this time, driven by more than just fleeting hype. While regulatory clarity is needed, particularly from the SEC, that remains to be seen.
The reality, however, is that the NFT space is now primed for a renaissance, with advanced and proven infrastructure ready to breathe new life into NFT utilities. For instance, NFT lending has emerged, opening the door for DeFi to weave its magic into the world of NFTs.
Trends with Real World Assets (RWAs) have been on an upward trajectory, painting a promising picture for NFTs. RWAs are projected to reach $16 trillion by 2030, which could translate into $16 trillion worth of liquidity pumped into NFTs backed by real-world assets.
These developments are clear signs that, if executed correctly, NFTs have a real chance to rebound and become relevant once again.
About Author
