NFT prices fall as FTX’s collapse casts shadow over digital collectibles
The value of non-fungible tokens, or NFTs, is plunging amid renewed questions about what cryptocurrencies are worth.
The crypto world took a big hit last week then FTX Trading declared bankruptcy amid an $8 billion deficit. The fallout is now affecting the digital collectible, said NFT expert Connor Borrego.
The price of “The Currency”, a collection of NFTs by famous artist Damien Hirst, fell 12.6% to $4,666.60 on Friday, while Moonbird NFTs fell 4.7% to $8,397.50 and Bored Ape Kennel Club fell 8.3% to $4,672.60, according to NFT Price Floor.
FTX’s bankruptcy has depressed the prices of some cryptocurrencies, reducing the purchasing power that NFT collectors previously had, Borrego said. Most collectors buy NFTs using cryptocurrency, although many marketplaces also accept traditional payment methods such as credit cards.
An NFT provides some proof of ownership of a digital object, or access to services, using a unique code on the blockchain associated with an image or video. NFTs can be transferred or sold, but due to their unique codes, they cannot be copied or divided into smaller parts like other tokens. Some people buy NFTs in the hope that their value will rise, while others buy them just for bragging rights or to participate in a new technology trend.
A “Bored Ape Yacht Club” NFT that Justin Bieber bought for $1.3 million in January is now worth $70,000, Insider reported.
Although NFT sales have fallen, the bright side is “it’s much cheaper to buy the expensive NFTs,” Borrego added.
Expect more scrutiny
NFTs was all the rage last year as artists, athletes, celebrities and major retailers used the new technology to purchase digital versions of their merchandise. But FTX’s collapse now means crypto companies must work to rebuild customer confidence, industry executives said.
Account holders were “really hurt financially” by FTX’s collapse, and they will remember how much they lost, Binance CEO Changpeng Zhao said at a TechCrunch crypto conference in Florida on Thursday.
“It’s going to really shake the confidence of the credibility of the trust in this industry,” he said. “So now people are withdrawing funds from centralized exchanges, and the volume [of transactions on an exchange] will decrease. Regulators around the world will be scrutinizing us very hard going forward.”
The hype around NFTs started to wane this year, even before FTX went up, recent data shows. Bored Ape Yacht Club has seen its market cap drop by $2 billion in the past seven months, according to Crypto Presales.
Sales of NFTs fell to $1.6 billion globally in the third quarter of this year, down 77% from $7.3 billion in the second quarter, according to NFT sector tracker Nonfungible. The number of active wallets with NFTs fell by 52% during the same time period, suggesting that customers are deciding to keep their NFTs instead of selling them at a loss, Nonfungible said.
