Effect of Cryptocurrency Market Crash on NFTs
On Tuesday, China placed further restrictions on financial institutions, continuing its 2017 ban on cryptocurrencies. With this, financial institutions and payment gateway companies in China are banned from providing any cryptocurrency-related services.
On Wednesday, cryptocurrency exchanges opened with Bitcoin, Ethereum, Binance Coin, and Dogecoin trading nearly 20% to 30% below its previous day prices. The price crash is not as unexpected as you would think. Bitcoin and Ethereum faced a decline last week when Elon Musk (Tesla CEO) refused to accept Bitcoin as a payment method.
What Next?
The nearly 40% dip in Bitcoin prices from its mid-April peak does appear dramatic. However, according to market experts, this is normal in a volatile market situation faced by the cryptocurrency market. A Bank of America survey has found that buyers hold an optimistic view of future increases in Bitcoin prices.
Some believe that the cryptocurrency crash is a short-term correction. Some investors may consider this an excellent opportunity to buy more cryptocurrencies. However, the past may not always be a marker for the future.
Current Trend in NFTs
Non-fungible tokens (NFTs) are a type of cryptocurrency with an underlying asset such as a digitized painting or music file. Other underlying assets may be collectibles, game items, and even financial products. The novelty value inherent in this concept is why it has burst out in the past three months.
The current market cap for NFTs is pegged at $18 billion. A video clip by Beeple was initially bought for $67,000 and then sold for $6.6 million, even though it can also be viewed for free. Digital artwork by Andy Warhol, created and stored in floppy disks in the 1980s, has found a new lease of life in the form of NFTs. These artworks have gone on sale from 19 May to 27 May with a starting bid of $10,000.
We might be seeing a shift in the way artists connect and receive remuneration. Vinco Ventures are about to release an exclusive album, available only in NFT, by Tory Lanez. Tory Lanez is a Canadian rapper and singer who has millions of fans across the globe. Tory Lanez believes that NFTs represent the future of digital distribution.
It is not just famous celebrities who are auctioning off their exclusive videos. ‘Charlie Bit My Finger,’ a viral video on two adorable babies that has been seen by almost 880 million people on YouTube, is set to be auctioned off as NFT on 22 May. The auction will remain open for 24 hours. The video is set to be deleted from all platforms and may never be seen again. This auction will be accepting only Ethereum based stable coins. NFTs are typically priced in cryptocurrency. So, how has the cryptocurrency crash affected the NFT market?
Effect of Cryptocurrency Market Crash on NFTs
NFT is a type of cryptocurrency and will naturally be affected by the general cryptocurrency market slump. However, many cryptocurrency experts remain hesitant on how exactly will NFTs be affected.
Edward Moya, a senior market analyst for OANDA, believes that the long-term cryptocurrency outlook remains upbeat. He also explains that many remain interested in NFTs due to getting exclusive access to old art. As creators of various musical and other pieces step into the NFT market, NFTs are still growing strong.
Many online galleries are illegally creating NFTs of works of artists and auctioning them for high prices. As such, artists also wish to take a chunk of this new trend.
In conclusion, a decline in NFTs is expected. However, with a bullish trend expected in cryptocurrencies, NFTs will also see exponential growth.
