Los Angeles
CNN
—
Donald Trump’s entry into the NFT world came at the worst possible moment.
The former president’s hyped “big announcement” turned out to be a set of digital trading cards for $99 a pop, prompting widespread derision from late-night hosts to even some Trump loyalists like Michael Flynn and Steve Bannon.
But the worst news for Trump is that the NFT bubble has burst by almost any metric.
Non-fungible tokens are digital art and collectibles that are typically purchased with cryptocurrencies. NFT art and collectibles collections exploded in popularity and value as of 2020. Digital cartoon monkeys and other NFT images became ubiquitous as celebrities sought them out on air and on social media.
But the heyday seems to be over.
Total NFT volume last month was down 89% from its peak in January, according to CryptoSlam. Trading volume on NFT marketplace OpenSea is at its lowest since June 2021, according to Dune Analytics. A collector can now purchase a Bored Ape Yacht Club NFT – the most famous collectible in the space – for a paltry $80,466, an 81% drop from its peak value.
NFTs have fallen in value during the so-called crypto winter caused by fading interest and general chaos in the crypto markets. The dramatic fall of major crypto exchange FTX (and its founder Sam Bankman-Fried) has been the pinnacle of a turbulent year in the space, with the total market capitalization of crypto falling more than 63%, according to Coinmarketcap.
The crypto winter shows few signs of thawing as prices fall to new lows and regulators and Congress now have crypto in their sights.
However, it’s worth noting that despite the bad timing, Trump’s NFT collection has shot to the top of NFT marketplace OpenSea’s rankings and has raised more than $1.4 million since its launch. On the Trump Digital Trading Cards website, the Trump collection claims to be “sold out” and the floor price for a single card has risen to $177.99, according to analytics website CoinGecko.
It is not clear how much Trump himself will take from the profits. The Trump Card Collection website includes a disclosure that says the Trump Collection is “not owned, managed or controlled” by Trump or his companies, and instead his likeness was licensed to “NFT INT LLC.” The LLC has no website and lists its address as a strip mall in Park City, Utah, next to an Asian restaurant and vape shop.
Celebrity crypto endorsers are under particular scrutiny right now.
Earlier this month, a class action lawsuit was filed against celebrities including Jimmy Fallon, Justin Bieber and Serena Williams, accusing them of improperly promoting The Bored Ape Yacht Club NFT collection. “Celebrity endorsements of cryptocurrencies are fraught with problems,” the complaint said, citing a 2017 SEC opinion warning against such endorsements.
Tom Brady, Gisele Bundchen and Steph Curry were also recently sued for promoting FTX, and in October Kim Kardashian was fined $1.26 million by the Securities and Exchange Commission for “illegal touting” of EthereumMax tokens.
Trump’s eleventh-hour NFT entry reflects another late attempt to jump on a market trend: special purpose acquisition companies (SPACs), which allow companies to go public without the regulatory burden that comes with a traditional IPO. SPACs boomed in 2020 with celebrities and investors piling in, but rising interest rates and a troubled stock market have led to a dramatic drop in SPAC value.
A SPAC called Digital World Acquisition Corp was launched in October 2021, months after the peak of the SPAC boom, and has sought to merge with Trump’s social media company that owns Truth Social. Trump’s foray into the SPAC world came after the boom.
“When Donald launched his SPAC in October 2021, the writing was already in blood on the wall for the SPAC bubble,” said hedge funder Benn Eifert of QVR Advisors. “He bought into a clear collapse.”
