NFT bubble pops: market implodes with a 90% drop in revenue in a month

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The craze for so-called NFTs seems to be waning, with sales falling dramatically after collectors rushed to spend millions on digital art and memes.

Since the May 3 peak, when $102 million worth of NFTs were sold in a single day, weekly sales are down 90 percent, according to an analysis by crypto news site prototypes on Friday.

A month ago, frenzied buyers squandered $170 million on NFTs in a week, while that number dropped to just $19.4 million last week, the analysis found.

An NFT, short for non-fungible token, is a unique digital token that is encrypted with an artist’s signature and verifies its ownership and authenticity.

A month ago, frantic buyers squandered $170 million on NFTs in a week, while that number dropped to just $19.4 million last week, the analysis shows.

A month ago, frantic buyers squandered $170 million on NFTs in a week, while that number dropped to just $19.4 million last week, the analysis shows.

A truck parked outside Christie's auction house displays a CryptoPunk digital art non-fungible token (NFT) on electronic billboards on May 11, 2021 in New York City

A truck parked outside Christie’s auction house displays a CryptoPunk digital art non-fungible token (NFT) on electronic billboards on May 11, 2021 in New York City

A close-up photo of an EVERYDAYS: THE FIRST 5000 DAYS collage, by digital artist BEEPLE, which sold for a record $69 million in March

A close-up photo of an EVERYDAYS: THE FIRST 5000 DAYS collage, by digital artist BEEPLE, which sold for a record $69 million in March

NFTs can represent ownership of digital assets including images, video, music, trading cards, cryptocurrency wallet names and even countries in online virtual worlds.

The high-profile digital assets listed for sale as NFTs include Twitter CEO Jack Dorsey’s first tweet, which raised $2.9 million, as well as the classic viral video “Charlie bit my finger” that raised $761,000.

They exploded in popularity in February and March. A single NFT artwork by digital artist Beeple raised $69.3 million at Christie’s, in its first sale by a major auction house of artworks without physical form.

But the market cooled when the craze seemed to fade.

Enthusiasts insist that falling sales are not a sign that the bubble has burst, claiming it is a normal fluctuation in a volatile market.

Since its May 3 peak, when $102 million worth of NFTs were sold in one day, weekly sales have fallen 90 percent

Since its May 3 peak, when $102 million worth of NFTs were sold in one day, weekly sales have fallen 90 percent

“The market trends observed in the first half of 2021 are just a reflection of the general runaway around cryptos and the NFT industry,” wrote the blog NonFungible.com.

“While all of these signals are extremely encouraging at this point, we should not lose sight of the overall trajectory of the NFT industry from early late 2017 to today,” the boosters wrote.

And there are signs that NFTs are gaining wider acceptance, with auction house Sotheby’s announcing this week that it is holding another auction with the ‘first’ NFT.

Natively Digital: A Curated NFT Sale runs from June 3-10. It features work by 27 digital artists, including Kevin McCoy’s “Quantum,” a simple geometric animation that Sotheby’s says is the first known NFT, created in May 2014.

There is also an Alien CryptoPunk NFT for sale: ‘CryptoPunk #7523’. CryptoPunks are a series of 10,000 unique pixel art characters created by Larva Labs in 2017. There are nine of the sought-after alien variety, two of which have fetched more than $7 million in previous sales.

Jack Dorsey's first tweet raised $2.9 million as NFT

Jack Dorsey’s first tweet raised $2.9 million as NFT

A single NFT artwork (above) by digital artist Beeple raised $69.3 million at Christie's

A single NFT artwork (above) by digital artist Beeple raised $69.3 million at Christie’s

People walk past CryptoPunk digital art non-fungible token (NFT) displayed on a digital billboard in Times Square on May 12, 2021 in New York City

People walk past CryptoPunk digital art non-fungible token (NFT) displayed on a digital billboard in Times Square on May 12, 2021 in New York City

For each purchase, the NFT is sent to the buyer’s cryptocurrency wallet; no physical artwork changes hands.

Bidding starts at $100 and buyers can pay in plain money or in the cryptocurrencies bitcoin and ether.

Sotheby’s first NFT auction was in April, with digital works by the artist known as ‘Pak’ bringing in $16.8 million.

Michael Bouhanna, contemporary art specialist at Sotheby’s in London, said that although sales in April were dominated by crypto-native buyers — people who have benefited from recent cryptocurrency price hikes — NFT artworks are becoming increasingly attractive to existing customers.

“I’ve seen a crossover with our collector base, very active in contemporary art, who are very intrigued and eager to learn more,” he said.

What is a non-fungible token (NFT)?

What is an NFT?

A Non-Fungible Token (NFT) is a unique digital token encrypted with an artist’s signature that verifies its ownership and authenticity and is permanently attached to the piece.

How do they look like?

Most NFTs contain some sort of digital artwork, such as photos, videos, GIFs, and music. Theoretically, anything digital could be converted into an NFT.

Where do you buy them?

Currently, NFTs are most commonly sold in so-called “drops,” timed online sales by blockchain-powered marketplaces such as Nifty Gateway, Opensea, and Rarible.

Why would I want to own one?

There are a variety of reasons why someone would want to buy an NFT. For some, the reason may be emotional value, as NFTs are seen as collectibles. For others, they are seen as an investment opportunity similar to cryptocurrencies, as the value could rise.

When were NFTs created?

Writer and podcaster Andrew Steinwold traced the origins of NFTs to 2012, with the creation of the cryptocurrency Colored Coins. But NFTs didn’t become mainstream until five years later, when the blockchain game CryptoKitties started selling virtual cats in 2017.

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