The market value of many NFTs has literally plummeted from their 2021/2022 peaks, but SuperRare’s CEO isn’t bothered.
Recently, John Crain lashed out against an article that declared NFTs dead, even though it stated that they are completely changing.
The collapse in the value of NFTs: SuperRare’s CEO notes
The NFT market exploded during the first part of 2021, coinciding with the first phase of the last major bull run, and saw near-constant growth for at least a year.
That was a speculative bubble, though, and even then it wasn’t hard to understand.
With the 2022 bear market crypto, such a bubble burst and the NFT market practically collapsed.
An initial decline occurred at the peak in late 2021/early 2022, but it was only after the implosion of the Terra/Luna ecosystem in May two years ago that the real collapse began.
If the weekly peak of on-chain NFT trading volume occurred in August 2021, with an average of $450 million per day, this daily average had fallen to $265 million by early May 2022.
However, by October last year, this average had even fallen below $10 million, that is, with a collapse of 98% from the 2021 peak.
However, with the crypto bull run starting between October and November 2023, there was a peak recovery.
Just think, by December it had returned to almost $75 million. But even this recovery first slowed and then underwent a correction, so much so that average daily onchain NFT transactions have now fallen to around $32 million.
Are NFTs dead?
The biggest collapse was experienced by NFTs related to the art market, and particularly image files.
At its peak, the NFT market had reached nearly 200,000 tokens traded per day, with a total daily value of more than $191 million.
Since then, there has been a slow decline that almost caused the artistic NFT market to implode, with declines of over 90%.
There is no market recovery for this type of digital content, making it difficult to imagine that art-related NFTs could see a significant recovery in the short term.
SuperRare CEO’s comment on the collapse of the NFT market’s value
However, John Crain, CEO of SuperRare, disagrees.
SuperRare is primarily a market for artistic NFTs, and Crain writes on his official X profile that the tons of negativity against NFTs should be assessed in a more general context.
Super interesting to see the sentiment on CT now. A lot of negativity surrounding NFTs. People forget that six years ago we literally started at 0, and two weeks ago @base had over $44 million in NFT coins. NFTs are clearly dead 😂 pic.twitter.com/bK1Mr7OcEu
— SuperRare John 💎 (@SuperRareJohn) June 26, 2024
Writes:
“People forget that we literally started from scratch six years ago, and two weeks ago there was over $44 million in NFT on Base. NFTs are clearly dead.”
However, he also adds that he believes we will continue to see a change in this business model.
On the other hand, even the accused article suggested a change in the business model.
The change
The problem is that it’s hard to imagine that the current bull market of artistic NFTs can actually recover.
Instead, it’s easier to imagine that the same NFT market could change and tap into new sectors.
The article rightly pointed out that they are not an asset in themselves, but merely a way to record on the blockchain who owns the rights to an asset.
Their main use should be to certify ownership and authenticity, and their main features should be related to the functionalities of the blockchains, such as interoperability, secure transfer and verification.
In short, the real asset is the underlying asset, i.e. what the non-fungible token represents, and not the NFT itself.
The idea that by purchasing an NFT you acquire an asset that would increase in value over time actually has too weak a foundation to support a market like that of 2021.
The real asset (RWA)
However, the next step should be to use NFTs to tokenize real assets, with the so-called RWA.
The key point is precisely the fact that an NFT actually represents a kind of certificate of ownership, verifiable and non-falsifiable.
The difficulty lies in creating a certain and unambiguous connection between a real asset and a token, and for this it will probably be necessary to refer to a certifying body, which is very unlikely to be decentralized.
In this form, NFTs can also be linked to the art world, as they could theoretically enable the tokenization of real works of art.
If the RWA token market has not yet taken off, it is likely because sufficient guarantees have not yet been put in place to ensure that a given token is actually linked to a property right.
When this problem is effectively resolved, the RWA market will truly be ready to take off.
Speculation
Instead, what happened in 2021 is just pure speculation.
A classic speculative bubble simply inflated, with those who bought an NFT only doing so because they hoped to resell it at a higher price.
These kinds of bubbles are always destined to burst sooner or later, even if once they burst they don’t always wipe out a market completely.
In the early 2000s, for example, the speculative bubble of the so-called dotcoms, the publicly traded technology companies that claimed to do business online, burst. When that bubble burst, many dot-com stocks disappeared from the stock markets, but some survived, and ten years later they returned not only to the levels reached during the bubble, but also far beyond.
For example, Amazon stock went through that speculative bubble, when the price rose from $0.1 to over $5 within a few years, only to fall back to $0.3 after the bubble burst, but in less than a decade the price returned to $5, and after a little more than twenty years it reached almost $200.
It is not known how the NFT market will end, but if it develops according to the needs and desires of investors, it could come back even stronger than before despite the disappearance of many NFTs.