NFTs Plunge Across the Board! Blue-chip Projects See Monthly Declines of Over 30%, KOLs Point Out: Who's Speculating on NFTs in a Bull Market?

NFT influencer wale.swoosh tweeted that the recent sharp drop in the floor price and market value of various blue-chip NFTs is not without reason, pointing out, among other things, the high gas fees of Ethereum itself and the high opportunity cost of NFT investments in the current bull market, all of which are major challenges in today's NFT market.

The problem with NFTs 🧵👇

(1/15) pic.twitter.com/U9ulSel8VR

— wale.moca 🐳 (@waleswoosh) March 11, 2024

Issues with NFTs

Yesterday, Bitcoin hit a new all-time high again, sparking a frenzy in the overall crypto market, including meme coins.

However, for the NFT market, today seems to be just another ordinary day as major blue-chip NFT projects like Bored Ape Yacht Club (BAYC) have plummeted more than 30% within a week, causing investors' wallets to continue bleeding.

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In response, Wales raised several questions regarding the current state of the NFT market, pointing out that only by truly addressing most of the issues can the NFT market have a chance to thrive again.

High Opportunity Cost of Bull Market

Firstly, trading NFTs often requires a significant amount of capital, which greatly diminishes capital efficiency:

Concentrating $10,000 on one NFT prevents you from diversifying and investing elsewhere.

Additionally, the opportunity cost of investing in NFTs during a bull market, compared to the staggering gains that other meme coins can bring, is considerably high.

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Airdrops Not an Effective Solution

Furthermore, many NFT projects resort to airdrops to re-engage their holders, with the veteran project Pudgy Penguins previously airdropping tokens worth tens of thousands of dollars to some community members.

However, Wales believes that while airdrop events may temporarily boost the market, their actual long-term benefits may not be significant:

As NFT brand competition intensifies, the demands on airdrops also increase; if holders link the value of the NFT to airdrops, future airdrops falling short of expectations could lead to sell-offs.

High Cryptocurrency Market Volatility and Focus on New, Not Old

With the rise of major NFTs like ETH and SOL, the USD value of NFTs is increasing; however, facing the previous slump in the crypto market, even with low trading volumes, NFT values are generally declining:

The high volatility of cryptocurrencies, as the pricing mechanism for NFTs, typically works against the NFTs themselves.

In other words, NFT holders need to consider the potential downside costs of cryptocurrencies when purchasing NFTs.

Clearly, investors are more inclined to follow the latest and hottest NFT projects rather than the veteran projects, making it difficult for their prices to rise.

High Gas Fees on the Ethereum Network

Most notably, as the mainstream trading market for NFTs, Ethereum's transactions often come with exorbitant gas fees once the market heats up, leaving investors in dismay.

What's Left for NFTs?

However, Wales also emphasized that the NFT market still has reasons worth paying attention to.

Emotional Attachment and Community

Firstly, for art collectors, NFTs may evoke emotional connections and investments based on their love or resonance with specific works or projects.

Furthermore, as a virtual medium similar to a "membership certificate," NFTs may attract people longing for specific themes or projects, forming a community with like-minded friends from around the world.

Greater Social Impact

Finally, as an organization, the NFT community may have a greater social impact on specific topics, issues, or collective movements, enabling participation in charity events, promoting social reform, or fostering creative expression.

NFT = Meme Coins with a Free Picture

It is worth mentioning that comments have vividly described the current state of the NFT market with a metaphor:

The current NFT market is like a pool you can leisurely swim in during your free time; and what project teams can do is beautify their oasis, plant some coconut trees, paint the floor, and then wait for the seasons to change.

And added, "Money always flows to where the market moves fastest, and people always chase others."

Meanwhile, users have expressed their pessimism about NFTs through a comment:

For most market participants, NFTs = meme coins with a free picture, and few are collectors in the cryptocurrency field; they are usually speculators.

Current State of the NFT Market: Across-the-Board Plunge, Blue-Chip Projects Down Over 30% for the Month

Looking at the current NFT market situation, apart from the astounding surge in Milady Maker and minor declines in CryptoPunks and Memelamd Captainz, other veteran NFT projects have seen drops between 30% and 51% within 30 days.

The figure above shows that the declines in DeGods and CLONE X, excluding those outside the top 20 in market value, are even more pronounced.