Wait a minute, are NFTs still worth investing in 2023?

Yes, despite the recent media uproar over whether non-fungible tokens (NFTs) are still an active investment, even as the icy bear crypto market tries to thaw back to life, wealthy investors continue to buy into the world of digital art , but it’s still more about the money than the art itself.

On the back of the FTX collapse in November 2022, which sent cryptocurrency prices further down and investors biting off more than they could handle, the drag-and-pull NFT market dragged down, as “blue chip” NFT- collections ‘ Floor prices fell to their lowest point.

Once heralded as the future of digital assets, even some of the world’s most favored NFT collections could not protect themselves from seeing their value slashed.

In October 2021, CryptoPunks, an NFT collection on the Ethereum (ETH) blockchain, held a floor price of 125 ETH. At the same time last year, prices fell below 67 ETH. In dollars, we’re looking at prices ranging from $430,000 at the top to about $114,600.

Other well-known NFT gatherings, such as Bored Ape Yacht Club (BAYC), saw the floor price drop from $408,000 to $111,000 during the same recorded period.

Meanwhile, investors continue to pour hundreds of thousands if not millions of dollars into digital art collections. In November 2022, a BAYC NFT sold for 800 ETH or about $927,000 on the secondary market, indicating that even though demand has fallen over the past few years, the price and value of NFTs remains a sought-after investment.

However, the same BAYC NFT is now worth just under $250,000 according to recent estimates.

As the market sees a slight recovery, some speculate that investors could return in the coming months, as a looming global recession, a banking crisis, geopolitical tensions and now the US debt ceiling crisis threaten to put already depressed markets in a choke hold.

Not dead. Just weakened.

Somewhat beaten down, and kicked from its once rosy pedestal, some argue that NFTs are still alive, the market has just weakened significantly over several months.

According to data from DappRadar and Dune, approximately $700 million in NFT sales were made on the secondary market in October 2022, a steep drop from the $5.36 billion recorded in January 2022.

“Blue chip” prices of collections have fallen dramatically since the peak in 2021, and the NFT market increased to more than $25 billion in trading volume by the end of the year. This pace was maintained for much of the first few months of last year, but when the crypto market began to see steady declines in the prices of Ripple (XRP), Bitcoin (BTC), Ethereum (ETH) and Dogecoin (DOGE), it soon led to a contagion that spreads to all corners of the digital asset market.

Months of decline, and scared investors fleeing the scene, hoping to park their money in other safe investment vehicles, meant that prices continued to fall, and the NFT market quickly lost steam.

It’s about money, not art

Although EFT has fallen out of favor with institutional investors, the focus for many who continue to buy into the market remains the monetary value of the digital assets, not the art itself.

A 2022 report revealed that eight out of ten NFT buyers invest in these digital assets for the money, not the art. Of these, 95% spent around $25,000 on NFTs in the past 12 months, claiming that investment return is the main reason for buying NFTs.

Non-Fungible Tokens have and will always remain an investment, much like traditional art sold on the global art market, instead internal auctions have been replaced with blockchain code and online platforms where investors can now flex their digital muscles.

When it comes to NFTs, the art takes a back seat, and the artist’s reputation and network fastens as the main deciding factor. These digital images continue to capture the attention of investors, and even with the current price still well over $100,000 for some blue chip collections, NFTs remain an investment vehicle for the wealthy and more experienced professionals.

It will grow, give it some time. But how much?

Just as with other market segments that have witnessed burgeoning growth, amid increasing demand and widespread commercial adoption, the NFT market may experience similar growth in the coming years.

We have seen this with many things. Green technology investment opportunities such as renewable energy and electric vehicles (EVs) are now at the fingertips of consumers, investors and governments, as demand for more sustainable technology grows on the back of countries seeking to meet their mid-century climate goals.

Agro and biotechnology startups are firmly entrenched in regions around the world, as communities continue to build towards more sustainable agricultural practices to ensure the improvement of agricultural activities and increase food security in corners of the world ravaged by poverty and affected by climate change.

The examples of this are endless, but that doesn’t take away from the fact that while NFTs may still be a relatively new addition to the digital asset market, they’re still an investment largely reserved for wealthier and more established investors.

The chances of you finding a college kid in their dorm somewhere in the Midwest buying thousands of dollars worth of NFTs remains a phenomenon, to say the least.

While NFTs remain quite a bit lower priced than they were just a couple of years ago, there is no ulterior motive for what these investments are – digital images created and distributed on a decentralized network.

Something that many of us seem to forget is that many of the most famous collections were only established as late as 2021, almost a full year after the start of the COVID pandemic.

Others like CyberPunk have been around longer since 2017, but still it only puts three more candles on the cake than other influential collections.

The market is also dominated by only a few key players, which leaves little room for entry for younger and less established investors to have a foot inside. The lack of competitors and the widespread ambiguity of NFTs have priced out potential investors, and it’s going to take several more years, perhaps a decade or two, before we’ll see better potential for NFTs in the long run.

What is the verdict?

Whether we want to admit it or not, NFTs are here to stay, and they may not be all the rage at the moment, as investors scramble around the market to hedge their fortunes against further economic downturns.

However, there is room for it to grow, especially with the revolutionary rise of artificial intelligence (AI) and capable Generative AI in recent months. Bringing these two technologies together could mean a wider entry point for newer and younger investors, but also help strengthen NFTs as a legitimate digital asset.

In light of current conditions, even the richest investors would be wise to look at other investment opportunities, especially if you are willing to drop hundreds of thousands on long-term investments. The market may be beaten down, and conditions seem bleak, but we have previously agreed that the market remains cyclical.

Yes, NFTs provide immutability in the decentralized marketplace, but there is still no application for it in the real world, and for investors looking for better returns, and something that is not as easily affected by the crypto market, it may be safer to play outside the digital marketplace, for now at least until conditions have improved a bit.