NFTs (Non-Fungible Token) have boomed greatly, however, some of them have suffered a decline in market value, failing miserably and causing everyone to wonder why this is.
According to a Bloomberg report, one-third of NFTs are worthless and another third are marketed at a low cost, so you could say that more than half of these are failing.
Many of them are based on Ethereum and are being marketed on the OpenSea platform. Although most crawl on the floor, there are exceptions such as Bored Ape and CryptoPunk that have managed to take hold of their customers and market.
Business Insider notes that only 1% of NFTs were traded for more than $1,500, while 75% sold for less than $15.
He notes that to find out the selling price of an NFT there is a model that considers 3 factors:
- Visual features
- Pre-sales of NFT
- The popularity of buyers and sellers
This is related to the fact that NFTs that have value have been bought or have the timely investment of world-class personalities such as Madonna, David Backham or are sold to social movements such as of the Ukrainian government. Other than that, most are worthless.
These factors determine the variability of NFT prices by up to 70%. However, it remains entirely unclear why the non-fungible token business has been showing a significant decline since September last year, according to figures from Dune Analytics.
In a report by Nansen, the number of NFT buyers was in February and although there are collections that continue to have a high value, the decline in sales indicates that the public has quickly lost interest in purchasing one of these pieces.
According to WhaleShark, consulted by Xataka, one of the largest NFT holders, this effect could be assimilated with the Initial Coin Offers (ICO) bubble in 2018, where money initially flows fast until they realize that the ecosystem is riddled with “bad apples”.
The ICO was a funding mechanism that uses blockchain, the technology behind Bitcoin or NFTs, to raise funds through the sale of new crypto assets created by a company.
The ICO boom began in mid-2017, when the method became a multi-billion dollar industry. By 2018, 55% of initial crypto asset offerings were not met. The imbalance led iCorating to conclude that “the quality of projects in general has deteriorated significantly”, as larger sums of money flowed into smaller amounts of business.
For the time being, the lack of buyers has cooled market expectations, hoping that “the bubble” that made them grow like foam when artists became interested in acquiring one.
On the other hand, there are those who started selling their NFTs at a lower price, according to Fortune about the case of someone who sold a Bored Ape Yacht Club for $224,000, that is, about $68,000 less than it cost him. Still, there is no single factor that determines why they lost their value.
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