A DIGITAL DI$ASTER
NFT buyers take a bath as values plummet
The once-sizzling market for NFTs has become a spectacular bust, as highprofile auctions increasingly flop and investors who plunked down millions for bizarre digital artworks now struggle to unload them at a tiny fraction of what they paid.
Last spring, crypto artist Beeple sold an NFT for $69 million. This month, he revealed he’d been working with Madonna for a year to create a trio of racy NFTs that depicted the Material Girl giving birth to a tree, a centipede and butterflies.
They sold for $135,000, $346,000 and $146,000, respectively.
“It was unexpectedly low,” Nick Rose, founder and CEO of NFT platform Ethernity Chain, told The Post.
The flop wasn’t unusual, however, amid the carnage that lately has engulfed non-fungible tokens, which are unique digital assets on the blockchain that are often used for art.
Last March, Bridge Oracle CEO Sina Estavi bought an NFT of Twitter co-founder Jack Dorsey’s first tweet for $2.9 million, calling it the “Mona Lisa of the digital world.”
Last month, he scrapped an auction to resell it when the highest bid came in below $14,000.
“This has been fueled by ridiculously inflated cryptocurrency prices and hysterical bidding,” Jeff Bell, CEO of LegalShield, a consumer protection firm, told The Post. “This is no different than the Gold Rush or the dot-com bubble . . . everyone wants to get rich quick.”
NFTs are getting hammered partly because cryptocurrencies, the payment method of choice for NFT sellers, are tanking along with tech stocks as the Fed hikes rates amid raging inflation.
Ethereum, the most widely used cryptocurrency on NFT platforms, is off 60%.
Sales are down
Figures for NFTs look even worse. According to research firm NonFungible, sales are hovering at around 24,000 a day this week — off from a September peak of 225,000 per day.
Cash spent on NFTs has also plummeted, with sales last week totaling $205 million — nearly 90% lower than their August high of nearly $1.9 billion.
“NFTs blew up when stimulus checks were coming in, but they grew too fast,” Rose said. “We’re going through a cool-down with the stock market, inflation, COVID and Ukraine.”
Still more troubling, according to some insiders: Bored Ape Yacht Club, whose cartoon likenesses of strung-out yet snappily dressed primates have generated an estimated $2 billion since their launch a year ago, has recently seen prices for its NFTs tank.
This week, its cheapest item available on the OpenSea NFT marketplace was listed at about $183,135, down from an all-time high of $429,000 that was set at the start of the month.
The drop ensued after Elon Musk changed his Twitter profile to a collage of Bored Apes he had cribbed from a Google search — taunting celebrities such as Justin Bieber, Paris Hilton, Jimmy Fallon and Steve Aoki, who have spent hundreds of thousands of dollars to claim a unique, authentic Bored Ape for themselves.
Still, Bored Ape Yacht Club’s creator, Yuga Labs, claimed a recent launch of property in the metaverse did “unexpectedly” well. And earlier this year, Snoop Dogg released a collection of NFTs that went for $44 million in five days. Experts say that’s because figures such as Snoop and Bored Ape have been building relationships in the niche community.
Meanwhile, signs of broad weakness are growing. CryptoPunk #273 — from an NFT collective called CryptoPunk that has built a cult following in the space by any standard — sold for $1 million six months ago. Earlier this month, it went for $140,000.
Worries about fakes
Worries about fakes and outright theft haven’t helped.
Tyler and Cameron Winklevoss, who bought NFT platform Nifty Gateway, have lost some of their digital art cache after being sued by a user who claims he was snookered in an auction into buying a $650,000 NFT he didn’t want.
A spokesperson for the Winklevoss twins didn’t respond to a request for comment.
One report suggests 50% of all NFT owners have lost access to one or more of their NFTs. One user on Discord, a popular messaging app in the crypto and NFT world, recently posted that he was leaving out of frustration.
“NFTs are a scam in many cases,” the user said.
The number of active NFT buyers and sellers in the second quarter has plateaud at around 500,000 — that’s down from a high of nearly 1 million in the first quarter of 2021.
Still, those in the NFT space remain optimistic.
“With nearly $8 billion traded in the first quarter of 2022, the market cannot really be considered to have collapsed. We are seeing more of a form of stabilization,” NonFungible notes in a recent report.