The major NFT projects have been lavished with attention by 2021. Non-fungible tokens have had a meteoric rise, led by NBA Top Shot and CryptoPunks during an early February surge.
Following various dips and dives, as well as a strong rebound in many large NFT projects over the last eight months, the outlook is all but obvious.
Charles Edwards, the founder of Capriole Investments and a crypto executive, views the end of the year as a probable NFT winter. Let’s look at what we’ve seen so far and what kinds of consequences could be in store.
In a recent tweet, Edwards makes an excellent point, pointing out that the improvements in NFTs this year have been ludicrous. While crypto groups frequently have “diamond hands,” it’s realistic to anticipate that many will try to protect taxable profits before the end of the 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 conversation in Edwards’ responses, on the other hand, offers a fascinating discussion on the logic of purchasing and selling. There are primarily two points of feedback: some believe that most of the selling pressure has already occurred (to which Edwards responds, “you think it’s done?”), and others believe that much of the selling pressure is still ongoing. Others argue that individuals will sell failures rather than winners.
Are individuals selling large projects to profit? Or will lower-level NFT projects be the most vulnerable to selling pressure? Many people believe that the world’s Bored Apes and CryptoPunks will not be subjected to this type of marketing pressure.
The reasoning is because they have been extraordinary winners this year, with unrivaled returns (and also the formation of clearly lasting communities with high financial barriers to entry now). Why sell when the future is so promising with these factors in mind?
Overall, no one knows what the outcome will be (although there is a clear logic behind both lines of thought), and it will most likely be a test of the long-term belief system underlying NFTs.
DappRadar is always a fantastic source of information on crypto and NFTs. When we look at 30-day marketplace statistics, we discover that most of the top brands in marketplaces are suffering volume drops.
Volume on the 30-day statistics is down for OpenSea, Solana’s Magic Eden, the centralized Flow platform NBA Top Shot, SuperRare, and Rarible. Who are some of those defying the trend? Decentraland, the metaverse’s headliner, has recently received a great increase. At the same time, Axie Infinity continues to run well while topping the play-to-earn category, and the WAX platform and cross-market AtomicMarket have also fared well.