Should NFT investors keep or sell their non-fungible tokens in a bear market?
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Just as the stock market entered a bear market in mid-June, so have the crypto and NFT markets. In fact, the crypto market has largely declined in the last 18 months.
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Bitcoin reached a new low of 18 months on June 15, 2022, and is now 70% below the record high of $ 69,000 in November 2021, Reuters reported.
Since many altcoins are linked to the value of bitcoin, most of the crypto market is also facing a downturn. On June 12, crypto lender Celsius Network stopped all withdrawals, snaps and transfers, according to The Wall Street Journal. The company said in a blog post that “We are taking this necessary action for the benefit of our entire community to stabilize liquidity and operations while taking steps to preserve and protect assets.”
Are NFTs in a bear market?
In contrast to cryptocurrencies, NFTs are not equally linked to the financial cycles in the stock market or the economy, NFT Evening suggests. In an article on March 8, NFT Evening writer Theo indicated that “NFTs are proving to be bulletproof against market crashes.”
But even though NFTs are not strictly linked to the crypto market, they are experiencing their own decline. NFT Evening reported that February saw a 40% decline in NFT sales, down from $ 4.4 billion in January.
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Many established NFT projects, including the Bored Ape Yacht Club and CryptoPunks, lost about 63% of their value in a dangerously short period of time in May, The Cryptonomist reported. So much of a fall indicates a bear market for NFTs.
Experts attribute the decline not only to the general market downturn and the crypto bear market, but also to NFT fraud and cyber attacks that have grown in popularity in 2022, Yahoo reported.
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What should you do with your NFTs during a bear market?
Cryptoticker announced that a bear market is the best time to invest in NFTs, writing: “Many NFTs have been shown to exceed expectations after the bear market.” Furthermore, Cryptoticker writer Owotunse Adebayo suggested that “The low risk and prices associated with a bear market mean that if the asset were to collapse, the losses would be low.”
Many people collect NFTs for their inherent artistic value, just as one can collect art or other collectibles. Consumers often choose NFTs they like, from artists or companies they want to support, without too much worry about the long-term value.
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If this describes your interest in NFTs, you may be able to find NFTs you like at a lower price than you would expect in a bear market. So, when the market turns around, you can make a decision to sell (or not) based on the profits (or losses) you stand to make or endure.
But while NFTs may appear to be “on sale” in a bear market, they remain volatile assets. If you view NFTs as an investment, you may want to refrain from spending more than you are willing to lose.
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