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NFTs had a record year in 2021 and 2022 is off to a very strong start, with January sales reaching a record high of $6.13 billion as of Jan. 29, according to The Block Data Dashboard. While the crypto market at large is struggling, the NFT space — nascent in comparison — is faring very well following 2021’s global market value hitting $23 billion, according to blockchain analytics firm DappRadar. The term was even named Collins’ Word of the Year 2021, and NFTs’ total market value is surpassing the market cap of some publicly traded companies — such as Domino’s.
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But have we reached peak NFT hype yet?
A new CoinShares report notes that Google trends data suggests we reached peak NFT hype at the beginning of Dec. 2021. This argument is also backed by data from The Block, which highlights that the number of NFTs sold peaked in Nov. 2021.
The report also notes, however, that it does not want to detract “from the incredible opportunities in the NFT world as there are some fascinating communities being built in the space.”
“If we have reached ‘peak hype’ then it is possible we could see a crash in prices similar to what was seen during the crypto price declines in 2018, where there were substantial price divergences from the good and bad projects,” James Butterfill, investment strategist at CoinShares, wrote in the report. “It is quite possible we are beginning to see this trend of price divergence between the good and bad NFT projects — what has value in the art world is very subjective and personal. The price divergences are most likely to be the greatest in NFT work that is implicitly or explicitly mimicking originals or first to market.”
Peak Hype Hasn’t Been Reached Yet, Experts Say
Matt Maximo, research analyst at Grayscale Investments, told GOBankingRates that he doesn’t think we’ve reached peak NFT hype — underscored by the fact that NFT trading activity has remained strong over the last week despite rough market conditions.
“NFTs as art gaining this much traction without mainstream ways for people to display and show them off beyond twitter profile pictures is also a very bullish indicator that the hype is not over,” Maximo said.
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The fundamental reason anyone purchases art is to display it and show it off. There are few good ways to do this for NFTs, and yet there are NFTs selling for millions of dollars every day, Maximo said.
“From that angle alone, there is a ton of opportunity to support the growth of that ecosystem from creating NFTs themselves, to developing hardware or new platforms for users to display their art. Popular social media platforms like Twitter have implemented verified NFT profile pictures for Ethereum and I expect this trend to continue across the remaining social platforms — Meta and Instagram especially,” Maximo added.
Maximo argued that beyond the current popular use cases for NFTs we have today, the space will continue to evolve and find new ways to leverage this technology to improve the experience around things like concert tickets — or even verified claims such as diplomas.
Analysts Suggest Room for NFT Space to Grow
The sentiment about the space being so new that we have only barely scratched its surface yet is echoed across the industry.
Alex DiNunzio, CEO and co-founder of digital comedy collectibles startup Jambb, told GOBankingRates that we keep forgetting how early it is concerning the development of NFTs –mainstream awareness and exploration has really just begun, while true adoption by the masses is still “quite a ways out.”
“Twitter just started verifying NFT profiles, and rumor has it Facebook and Instagram are soon to follow. Ubisoft has started integrating NFTs into their gaming, setting the stage for a market expansion into gaming NFTs,” DiNunzio said.
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YouTube CEO Susan Wojcicki also said earlier this month that the company is looking to add NFT features, as GOBankingRates previously reported.
“The past year in the world of crypto, nonfungible tokens (NFTs), and even decentralized autonomous organizations (DAOs) has highlighted a previously unimaginable opportunity to grow the connection between creators and their fans,” she wrote in a letter posted on the company’s website.
Anthony Georgiades, co-founder of NFT marketplace Pastel Network, points to another factor about NFTs’ potential and their longevity. “The market is not purely driven by digital art, collectibles and gaming assets, but by its accessibility and future potential,” he said in an interview with GOBankingRates.
And finally — some experts note the very simple fact that because NFTs are still a relatively novel concept, the majority of people are still unaware of them. There is, however, a “tremendous amount of utility being built into a lot of these NFT collections,” Jake Udell, founder of Metalink — a platform that will allow individuals to connect, acquire and trade NFTs — told GOBankingRates.
He said that given the substantial lift required to acquire crypto to make these purchases, NFT purchasing is still largely inaccessible.
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“I always say we haven’t seen the ‘Netscape Navigator’ or browser, if you will, that makes it seamless to navigate the NFT space, in a manner similar to what AOL did for the internet,” Udell said.
“But those tools are being developed as we speak. Combined with the increased efficiencies of blockchain technology that will make the cost of access more affordable, we’re in for another digital revolution. And, yes, some of this hype might die down in the coming months. But the power of this technology to enable real-time digital transactions is unprecedented.”
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