2021 has been treating the biggest NFT projects with love. It’s been an absolute boom for non-fungible tokens, spearheaded by the likes of NBA Top Shot and CryptoPunks during an initial February boom.
After some dips and dives, along strong resurgence in many major NFT projects across the past ~8 months, what lies ahead is all but clear skies.
Crypto executive and Capriole Investments founder Charles Edwards sees the close of the year as a potential NFT winter. Let’s take a look at what we’ve seen so far, and what sort of impacts could lie ahead.
An NFT Winter?
Edwards makes an apt point in a recent tweet, highlighting that the gains in NFTs this year have absurd. While crypto communities often possess “diamond hands” that are bar none, it’s reasonable to believe that many will look to secure taxable gains before the end of year:
Expecting a bit of an NFT meltdown in December.
Huge amounts of money were made in NFTs this year. People will need to book profits for end of year tax.
That means sell pressure on an illiquid market.
— Charles Edwards (@caprioleio) November 30, 2021
The dialogue in Edwards’ replies makes for an interesting discussion on the logic of buying and selling, though. There is by and large two main points of feedback: some believe that much of this selling pressure has already occurred (to which Edwards replies, “you think it’s done?”) and others believe that individuals are going to be selling losers – not winners.
Are individuals selling their big projects to realize gains? Or will middling to lower-level NFT projects be the most subject to selling pressure? Many would suggest that the Bored Apes and CryptoPunks of the world won’t be subject to this sort of selling pressure. The logic behind this being that those have been exceptional winners this year with unparalleled returns (and also formation of clearly lasting communities with high financial barriers to entry now). With these characteristics in mind, why sell when the future is bright?
In all, no one knows what the end result will be (and there’s certainly logic behind both lines of thinking), and it’ll likely be a test of the strength of the long-term belief system behind NFTs.
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What We’re Seeing
The good folks over at DappRadar always supply some great data around crypto and NFTs. When we take a look at 30-day marketplace data, most of the headline names in marketplaces are seeing volume declines. OpenSea, Solana’s Magic Eden, centralized Flow platform NBA Top Shot, SuperRare and Rarible are all seeing declines in volume on the 30-day numbers. Some of those bucking the trends? Metaverse headliner Decentraland has seen a nice boost lately, Axie Infinity continues to run strong while leading the play-to-earn category, and WAX platform and cross-market AtomicMarket has performed well also.
Is an end-of-year selloff reasonable to expect, or is the worst of it in the rearview mirror? Tweet us your thoughts @Bitcoinist.
Featured image from Pexels, Charts from TradingView.com The writer of this content is not associated or affiliated with any of the parties mentioned in this article. This is not financial advice.
Source: Bitcoinist News