There’s no doubt that the digital collectibles market, powered by blockchain technology-enabled nonfungible tokens (NFTs), exploded onto the scene in 2021 to become one of the most talked-about topics in the crypto and blockchain space. Celebrities, influencers, and everyday digital art fans alike have rushed to mint and trade everything from collectible moments from beloved film franchises to truly unique digital art pieces that just don’t exist anywhere else.
Unfortunately, the hype surrounding NFTs turned into a bubble that, as of mid-April 2021, has officially burst. It’s true that NFTs are becoming an increasingly popular asset class, but more than 95% of NFT collections on the Ethereum blockchain currently have zero value––as determined by the number of bids on the pieces versus the amount asked for them.
To be fair, this isn’t entirely due to a lack of interested buyers. Many of the currently hot NFTs haven’t been up on the market long enough for fans or collectors to take note and jump on them. Furthermore, while there are many who are buying for the purpose of reselling at a later date (so-called “flippers”), these buyers are not looking to build a collection but rather make a quick profit within the current market.
The bottom line is that the current NFT craze isn’t sustainable and it’s important for the market, as well as those involved in it, to show patience to allow time for the actual value of high-quality NFTs to be revealed. With excitement already waning, now is the time for creators and collectors alike to carefully consider their investments and be more intentional in determining which pieces or collections they think will become the most valuable in the future.