Opinion: WSJ Says the NFT Market Is Dying. It’s Flawed

Key Takeaways

  • The Wall Avenue Journal has revealed a deceptive article claiming that the NFT market is dying.
  • The article cherry-picks examples of poorly-performing NFTs, highlighting the journalist’s lazy reporting.
  • In the identical article, claims of an imbalance between provide and demand within the NFT market fully miss the worth proposition of non-fungible tokens.

Knowledge compiled by The Wall Avenue Journal means that the NFT market is in decline. Nevertheless, energetic individuals within the NFT market know that this couldn’t be farther from the reality. 

WSJ Compiles Doubtful NFT Knowledge

Opposite to what The Wall Avenue Journal could say, the NFT market isn’t “collapsing.”

In a Tuesday article revealed by The Wall Avenue Journal, reporter Paul Vigna claims that NFTs are dying. The piece opens with two daring claims: every day NFT gross sales have fallen 92% from a peak of about 225,000 in September and the variety of energetic wallets buying and selling NFTs has additionally plummeted nearly 90% from its November highs. The statistics paint a damning image. However anybody who takes a more in-depth have a look at the place these figures got here from and the methodology that produced them ought to understand that they don’t maintain up beneath scrutiny. 

In line with Vigna, these statistics got here from, a self-described NFT Market knowledge and evaluation platform. Particularly, they seem to come back from NonFungible’s NFT market Q1 2022 report revealed on Apr. 28. However that report depends on a restricted scope of information. 

It states that its knowledge was pulled from transactions involving ERC-721 NFTs on Ethereum, NFTs on the Ronin chain used within the play-to-earn recreation Axie Infinity, and NFTs on the Movement blockchain. Given the excessive variety of Ethereum NFTs that now use improved contracts comparable to ERC-1155 and ERC-721A, NonFungible’s pattern skews towards older NFTs and excludes many more recent collections. For instance, Azuki, which is presently the sixth most-traded NFT assortment of all time, is probably going lacking from the information because it makes use of an ERC-721A contract. 

Moreover, the 2 Ethereum sidechains included in NonFungible’s report, Ronin and Movement, have each had an abysmal quarter. Ronin, which hosts NFTs for Axie Infinity, has seen its participant base sharply decline because it grapples with rebalancing its in-game financial system following a current $550 million bridge hack. Movement has additionally seen its greatest NFT product, NBA High Shot, fall from grace in current months, with secondary market gross sales quantity dropping over 80% since February 2021. 

For some purpose, NonFungible’s knowledge additionally omits NFTs residing on different blockchains comparable to Solana and Polygon. In line with knowledge from CryptoSlam, Solana has processed over 21,000 NFT transactions over the previous 24 hours, making up $7.3 million in buying and selling quantity. Polygon, whereas smaller, additionally facilitates over $1 million price of NFT trades every day. By excluding the second and third most energetic chains for NFT buying and selling, NonFungible’s knowledge doesn’t precisely signify the entire sector. Claims that the information signifies a declining NFT market are subsequently deceptive at finest. 

Cherry Picked NFTs 

As Vigna’s article continues, he tries to again up his argument that the NFT market is declining with examples of NFTs which have dropped sharply in worth. The primary on his chopping block is Jack Dorsey’s NFT of his first tweet on Twitter, which offered for $2.9 million in March 2021 and has since struggled to promote.  

It’s essential to notice that Dorsey’s tweet was a part of the primary wave of NFT euphoria that hit the area shortly after Beeple’s earth-shattering $69 million NFT sale at Christie’s. In that sense, it’s not shocking that Dorsey’s highly-specific NFT has not discovered one other purchaser. However to say that this instance represents the complete NFT area exhibits a surprising lack of know-how. 

Simply three days earlier than Vigna’s article hit the entrance web page of The Wall Avenue Journal, Bored Ape Yacht Membership creator Yuga Labs carried out the most important NFT sale in historical past. The drop, consisting of over 55,000 land plots for its upcoming Metaverse recreation Otherside, introduced in over $310 million in preliminary gross sales. Lower than every week since launch, the gathering has exceeded $700 million in buying and selling quantity throughout greater than 27,000 gross sales. 

The Otherside land drop isn’t an anomaly. All through the primary 4 months of 2022, a number of new collections comparable to Azuki, Okay Bears, Moonbirds, and VeeFriends Collection 2 have offered out after vastly anticipated launches. Buying and selling on secondary marketplaces like OpenSea has boomed (it noticed $3.4 billion price of buying and selling quantity final month), returning good-looking income for eager flippers. 

To take simply two of those collections for instance, VeeFriends Collection 2 and Okay Bears have collectively seen shut to twenty,000 gross sales over the previous week. In his article, Vigna says that weekly NFT gross sales are presently at about 19,000, nevertheless it’s painfully apparent he’s incorrect.  

Vigna’s article additionally highlights an NFT from the Snoop Dogg-curated assortment The Doggies. Doggy #4292, one of many rarest items within the assortment, exchanged fingers for 9.69 Ethereum in the beginning of April. Vigna states that the NFT is now up for public sale with a price ticket of over $25 million. In actuality, as is a well-liked observe within the NFT area, the proprietor has listed the piece at an outrageous value, more likely to encourage excessive bids from NFT whales or present that they haven’t any intention of promoting it. The “highest present bid for 0.0743 ETH” that Vigna cites almost certainly comes from a scalping bot that routinely sends gives beneath the ground value to all holders in a given assortment. To explain this as a “bid” on an “public sale” exhibits insufficient analysis and an alarming lack of care in reporting. 

Vigna claims that the market is dropping curiosity in NFTs, however the fact is, he doesn’t know the place to look. For individuals who are following the area every day, NFT mania remains to be going sturdy. The overwhelming majority of accessible knowledge backs this up; OpenSea, the most important NFT market, now frequently brings in greater than $10 million in income every day in comparison with averages of $6 to $7 million in November 2021. The trade additionally registered its second-highest every day buying and selling quantity in the beginning of April, making $19.7 million in lower than 24 hours. 

Knowledge from blockchain analytics service Nansen paints an analogous image. Nansen’s Blue Chip-10 index exhibits a speedy enhance available in the market capitalization of fascinating NFT collections comparable to Azuki, Clone X, and Doodles. The index has seen a year-to-date enhance of 81% and is presently buying and selling at all-time highs.

Why Are NFTs Sought-After?

The ultimate mistake from the The Wall Avenue Journal’s article that wants addressing is the so-called “imbalance between provide and demand” within the NFT market. Vigna alludes to the availability of NFTs outpacing consumers as an indication that the market is crashing. Whereas this could be true for conventional equities, it will get the worth proposition of NFTs spectacularly incorrect. 

To make such an argument reeks of dishonesty. It’s like saying no person desires footwear anymore as a result of 1000’s of ugly, low-quality sneakers sit unbought on retailer cabinets though Nike and Adidas are raking it in and restricted version Yeezys promote for multiples of the retail value on the secondary market. 

Presenting it via the lens of the normal artwork market, the availability of bodily work produced far exceeds the demand from artwork collectors, however this doesn’t imply the high-quality artwork market is in decline. The barrier to entry for creating NFTs is extremely low, which is an effective factor for budding creators. Nevertheless it additionally means lots of trash will get minted. To measure the complete NFT market collectively by way of provide and demand is irrelevant when every assortment trades by itself fundamentals. Yuga Labs’ current Otherside drop proves this. Whereas different collections would wrestle to promote out 55,000 NFTs for 1000’s of {dollars} apiece, Yuga Labs did so whereas nonetheless disappointing 1000’s of hopeful minters who weren’t fortunate sufficient to get one. 

Surprisingly, NFTs look like the one crypto belongings presently defying the shaky macroeconomic outlook. Whereas the Fed raises charges and risk-on belongings slide, NFTs are nonetheless drawing in cash from speculators and worth seekers alike. NFTs may see a drawdown sooner or later in response to extra financial uncertainty. If inflation eats away on the quantity of spare money the typical individual has, it may scale back demand for non-essentials comparable to NFTs. However for now, opposite to what the The Wall Avenue Journal may need you imagine, the NFT market is booming. 

Crypto Briefing reached out to each and Paul Vigna for remark however had not obtained a response at press time. 

Disclosure: On the time of penning this piece, the creator held ETH, SOL, and a number of other different cryptocurrencies. 

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