Are NFTs Still a Thing? – Will NFTs Return in 2023

The bear market and current global recession has hit the NFT market very hard.

Not just NFTs, but cryptocurrency like Bitcoin and Ethereum too.

The value of Bitcoin and Ethereum has dropped by around 70% in over a year.

You may have noticed that it isn’t just NFTs and cryptocurrency that has taken a huge downturn, but stocks and shares have been hit hard too, especially in the technology industry.

Therefore, in order to understand whether NFTs are still a thing, and whether they will make a come back in the future, a history check of how stocks and shares have traded in bear markets in the past may yield some answers.

NFTs and cryptocurrency are simply an investment based on a similar logic to all other investments. People invest with the hope of the value of their asset being greater in the future.

NFTs are assets, just like shares in a tech company, or coins in a cryptocurrency blockchain, and just like all speculative assets they tend to go down as well as up.

In this article we will look at the rise and fall of NFTs as well as similar historic rises and falls in other speculative investments over the years and whether history is likely to see a repeat of this trend.

How NFTs Came About

Understanding the potential for an NFT comeback, and whether NFTs will still be a ‘thing’ in the future, it’s good to begin looking at how NFTs first came about.

The first NFT launched way back in 2017 and although it is a hotly contested debate, the popularity of Crypto Punks gave them the coveted crown of being the first NFT collection to be sold.

Valuable Bored Ape Yacht Club NFT

In fact, when Crypto Punks launched it was possible to get one for free. Fast forward a couple of years and the rarest Crypto Punks were changing hands for millions of dollars!

The first push in NFT interest came more than a year after the collection launched.

NFTs became cool to own. No longer for the nerdy geek setting up a digital wallet and loading up with some cryptocurrency. These were sought after collectibles, and collectibles can come in many different varieties – artists have even sold empty space for small fortunes.

The majority of interest in NFTs came when big brands started to dip their toes in to the NFT waters.

Why NFTs Became Popular

A major shoe brand decided to see what would happen with a $150,000 purchase of a Bored Ape Yacht Club NFT and once one sold for this value, all of a sudden hype began.

The NFT industry became a replica of the Klondike gold rush!

Crypto Punks and Bored Ape Yacht Club started trading for 6 figures, and then the rarest NFTs in those collections begun selling for 7 figures!

Once assets start trading for these types of volumes then the media took hold and ran with the story.

This coincided with a huge bull market and also Covid 19, which meant as people were not traveling and spending less, they had more time and money to spend on more speculative assets – such as the booming NFT trade.

Overnight collection after collection popped up looking to sell-out and make fortunes.

NFT creators were becoming millionaires literally overnight.

NFT tools entered the market helping those with little technical expertise to launch collections and before long up to a million NFTs were being created and put up for sale each week.

This, along with lack of security and regulation, meant over supply against demand and scams were plenty.

This started the demise of the NFT industry.

What lead to the downturn in NFT Value

In March 2022 things were looking incredibly good for the NFT industry.

Although the general public couldn’t see why people would spend over $1million on a cartoon character, those in the industry knew only too well the value associated with owning such a prized piece.

To start with NFTs became popular as collectible items – like rare art and pristine versions of first edition comic books from Marvel and DC.

The owners of such rare pieces in an NFT collection were looked upon as gurus and those with disposable income.

Just owning a Bored Ape Yacht Club NFT would get someone 10,000 Twitter followers overnight.

As the very rare NFTs were off limits to all those except the deepest pockets, it meant NFT creators needed to find a way of provided value and did so by way of utility.

NFT utility is simply the value one holds by owning an NFT. For example, the NFT may access a members-only subscription to an event, or series of events.

It may have provided value in a character in an online game, or a boost of some kind only accessed by those holding the NFT.

A recent hotel chain decided to offer value to holders of their NFTs to stay a certain number of nights in their hotel chain a year.

The opportunities of provided value to NFT holders is almost unlimited but before the industry went where many expected it would, things changed.

The foundation of an NFT collection is the irrefutable blockchain it resides upon and a blockchain is the structure and validity behind a cryptocurrency.

The concept of a blockchain was to remove the need for powerful brokers and banks to yield all the power and provided authentication via an incredible safe technology to run the worlds monetary capital by way of cryptocurrency coins.

Unfortunately, a blockchain is incredibly secure, the process of validity on to the blockchain isn’t.

This meant many scammers were able to set up fake NFT sites, and fake NFT collections promising the world but as soon as the NFT collection sold the owners would withdraw the millions of dollars in cryptocurrency and disappear – instead of creating the business and providing the value they offered.

AS the NFT industry and blockchains are unregulated it meant this happened again and again.

NFT Scammer

Some unscrupulous hackers created fake NFT collections that only had to be clicked on once and they had the authority to withdraw all the money from someone’s digital wallet.

This would be like someone walking into a bank and taking all the money from your account.

If this happened, there would be no way to trace the cryptocurrency or recover the missing funds.

Scams were commonly called ‘rug pulls’, and eventually people hesitated to buy NFTs for fear of rug pulls which were happening on a daily basis.

This began a downward trend and may in itself have brought a downfall in NFT sales, but at the same time the bear market hit sending all markets in to a free fall.

Stocks, shares, crypto and NFTs all crashed and fell by more than 70% in value.

Despite Black Rock, the largest investment house in the world, opening up the ability for investors to buy and invest in Bitcoin wasn’t enough to help rally support.

With the recent fall of FTX, one of the largest cryptocurrency exchange brokers in the world, collapsing it has led to a real lack of confidence in NFT and cryptocurrency purchasing.

Historic Bear Market Trends

As NFTs are a relatively new concept it is difficult to go back in time to look at how and when the market recovered after a crash or bear market.

This means little data to reflect a true picture as to whether NFTs could make a comeback.

Instead, we can look at how stocks and shares have recovered after crashes and bear markets during these example periods:

  • September 1957 to March 1958
  • June 1972 to December 1974
  • December 2007 to March 2009

Based on this data and all other statistical data over the past 100 years we can see that it took, on average, 20 months to recover from a stock market crash.

What the Future Holds for NFTs in to 2023

The NFT industry began to fall in April 2022 and based on historic bear market crashes in the stock market we could see a return of NFTs by December 2023.

Moon Birds NFT

The NFT industry always needed to become a split between collectible and value based assets, and both require capital.

Crypto Punks and Bored Ape Yacht Club were first and have already obtained their ever lasting place as collectible items but that isn’t to mean other brands (existing and future) will not be able to also create collectible NFTs that provide status symbol ownership.

The real value in NFTs is in utility.

NFTs can not be faked. The full audit history of the asset is available for all to see on the blockchain. It cannot be edited, changed, or forged.

It also isn’t possible to force a way in to a blockchain and steal anything.

Therefore, brands using a form of NFT to provide authentication for its services is amongst one of the safest options that exists today.

The same can be said for art. The art world has lost millions and millions of dollars to forgeries, whereas an NFT can be verified from origination and owner to owner without question.

So much of people’s lives are online now, it makes sense for the authentication of a collectible to be online too.

Are NFTs Still a Thing – In Conclusion

NFTs are still a thing. Today NFTs are still being bought and sold.

This may not be in the same quantities as during peak periods, but the world is aware of NFTs now and so are big businesses that can seamlessly integrate them into their systems and services.

Any regulation from U.S. and global authorities will help.

Investors not only need to have value in what they invest in to, but security too.

Buying NFTs was, and still is, a complex process.

From opening a digital wallet, to buying cryptocurrency and then buying an NFT and paying gas fees, it can be a daunting experience even for those comfortable with technology.

Services will soon launch helping those non techies buy NFTs using a shopping basket and credit card.

Although the funds will need to buy cryptocurrency to purchase the NFT and add it to the blockchain, this will be done seamlessly in the future.

This will open up the NFT market to hundreds of millions of extra buyers.

With added security, and the economy stabilizing, and ease of purchase NFTs will return – it may just not be in the same way they did before.

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