Non-fungible token markets have broken trading volume records. But experts believe the nascent NFT space could soon experience a crash that would mimic the ICO collapse of 2019.
NFT Crash, if or when?
An NFT accident can happen within the next six months. This was according to Ryan Carson, COO of PROOF Collective, a podcast covering the NFT ecosystem in depth. Your tweets about the same reading,
“Quick 10,000 PFP projects, me-too derivations and wolfgame copies will go out because all Coinbase credit card buyers will lose 100% of their ETH.”
Carson also noted that institutional and private wealth, along with Decentralized Autonomous Organizations (DAOs), especially with $100 million bonds, will double across multiple categories.
This includes unique artist pieces, entertainment/game universe projects, gated NFT communities, and originals like Punks Chromie Squiggles. In addition, high-level players can also strengthen their commitment to metaverse projects that have gained tremendous traction, such as The Sandbox and Decentraland.
The exec also noted that a cohort of “sophisticated investors” will leverage DeFi to increase leverage while staying “long in ETH.” Thus, they could “flood the market with even more capital” by focusing on the same high-quality original designs, which will only drive up prices.
This is when “fractionalization of NFT” will become popular, which will cause collectors and retail investors to re-enter the market just to buy the already expensive quality projects.
He concluded by saying that the NFT space can survive if players don't go off chasing "get-rich-quick schemes."
Unsustainable P2E Economies
Play-to-win NFT games have become all the rage. But nothing lasts forever, and the bear market reveals all the shortcomings and viability of a project that doesn't necessarily have real-world demand.
What is true is that the 2020-2021 bull market has increased the demand for NFTs and tokens in the game. This paved the way for lucrative opportunities for gamers and spawned an entirely new economy – from just a passive hobby to a multibillion-dollar industry.
However, Jason Choi, general partner of Spartan Capital, believe P2E games will become less profitable than they are today in the absence of a bull market. he added,
“If the financial proposition of P2E games starts to wane, it should make up for that by having fun parity with popular Web 2 games, especially if they are to command unicorn ratings.”
Praising Axie Infinity's strategy for gameplay first and economy second, Choi added that the current model for guild-run scholarships, fervor for DAO tools, marginally enhanced versions of DeFi holders, and tier 1s without massive treasury may not last.
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