Brands and celebrities invest more in NFTs
Consumers don't like to buy JPEGs, yet corporations keep trying.
The crypto winter is still going strong in the wake of the Terra fiasco and the failure of other large crypto loan companies.
It turns out that NFTs, the cryptocurrency's blockchain cousins, aren't doing that well either.
The repercussions of the crypto winter are being felt by highly volatile speculative ventures that tokenize digital assets on the blockchain.
According to data from the decentralized app store DappRadar and cited by Fortune, trading volume on the largest NFT marketplace, OpenSea, has decreased by a staggering 99 percent in the four months between May and August 2022.
When you examine the financial data, the NFT market's declining popularity becomes even more apparent. On May 1, OpenSea recorded approximately $2.7 billion in transactions.
However, celebrities and brands continue to promote NFT projects in hopes of raking in their pockets of digital money.
In fact, celebrities peddling NFTs without proper disclosure have become so common that the nonprofit consumer watchdog Truth in Advertising has sent out warning letters to several celebrities, such as Justin Bieber and Reese Witherspoon, regarding their deceitful conduct.
At the MTV VMAs last Sunday, the same August 28, Eminem and Snoop Dogg took to the stage and as they performed they were transformed into 3D models of their respective NFT Bored Ape Yacht Club. Many observers were perplexed as to why the performance's Bored Ape element was included.
However, if you know either artist, you know about their forays into the NFT space over the past few years. In particular, Snoop Dogg used all non-fungible tokens, having made $44 million earlier this year from selling NFTs from his latest album.
Earlier this year, it was a much different time for the NFT. Today, the value of Bored Ape Yacht Club NFTs, by far the most popular of NFT projects, has also dropped. At its peak on April 30, the floor price of Bored Ape NFT was 154 ether, the cryptocurrency traded on the Ethereum network, but as of September 1. 2, the floor price is around 75 ether, which means a drop of more than 50% in value. Ether's value likewise decreased, falling from approximately $2,800 in April to $1,500 in September.
So Bored Apes has been quite successful.
And the slowdown doesn't just happen on OpenSea. Other NFT markets are feeling it too. Coinbase, the largest cryptocurrency exchange in the United States, launched its own NFT marketplace in May. It failed to gain traction, often only registering five-figure sales per day. GameStop, a retailer of video games, likewise introduced its own NFT Marketplace in July and experienced essentially the same activity—or none thereof.
Some brands read rooms though. Most notably, the studio behind the hugely popular video game Minecraft has announced that it will not be participating in the NFT.
But the brand's enthusiasm for NFTs continues. Starbucks is looking to roll out a loyalty program using NFT, premium brands like Gucci and Tiffany are getting in on the irreplaceable token action, and even M&Ms are releasing a new session. My boring candy version. to be.
Cryptocurrencies have faced recessions before and are back. But the new NFT phenomenon faces a bigger challenge: brands believe in it, but consumers don't. This is a significant issue that requires resolution.