For the Love of the Game (Market Commentary) |
The NFT market is finally reacting to the SEC’s stepped-up attacks against the crypto industry. News of Binance’s US assets being frozen, and that USD withdrawals are coming to a pause has NFT traders liquidating NFTs or sitting on the sidelines. Either way, it’s pretty clear we’re entering another new phase of the NFT market, and traders are being
cautious. How low we can go, nobody really knows. When FTX collapsed the Forkast 500 NFT Index reflected over a 33% loss in value. Today’s market,
while showing signs that capitulation is coming, is slowly bleeding out and down nearly 10% in the past 7 days. The Forkast 500 NFT Index hit an all-time low yesterday, bottoming out at 2,962. Forkast 500 NFT Index reflecting FTX collapse’s impact
November 1 2022 - 12-31-22 - Source Forkast 500 NFT Index reflecting the impact of the SEC’s lawsuits
6-6-23 - 6-13-23 - Source Navigating this market leads me to more questions than
answers, and they come to me endlessly throughout the day. I wonder if we have found a floor for NFTs and if today’s active traders are closer to collectors than they are speculators. Can they hold the line until the next wave of innovation that’s set to arrive as blockchain-backed gaming? Will there be more FUD delivered by the SEC, and does the US even have that much impact on markets anymore as builders are driven overseas? Stay tuned for more insight into these questions. Noteworthy Happenings There’s no shortage of major developments taking place across the NFT landscape. - Bitcoin ordinals are getting a major upgrade with Inscriptions 2.0.
With this latest Bitcoin ordinal update, inscriptions can now reference another inscription which essentially removed the 4MB size limit. So what can be preserved on-chain now? Video games, generative art, applications, and new tokens that haven’t even been dreamed of yet. We’ll see what happens when builders get their hands on the new tech, but this advancement shows that we have just been scratching the surface of what the
Bitcoin ecosystem will one day look like. - Nobody is really buying
NFTs.
Ok, that’s not true, but the market is reacting to a new environment of intense SEC scrutiny. On Saturday a Twitter account named NFTstatistics pointed out that over 93% of all ETH volume on Blur was sellers accepting bids. This means that there were very few sales, and
instead was likely points farming, or accepting offers under the floor price in an attempt to get liquidity.
- The Polygon blockchain is unveiling an upgrade
to its ecosystem called Polygon 2.0
Details will be revealed over the next few weeks, but there’s exciting talk about some drastic changes, including new utility for $MATIC, changes to governance, and even to the protocol’s architecture. With 2.0, Polygon is aiming to build a value layer through infinite scalability and unified
liquidity. - Art may be immune to tough
market conditions.
Last edition of On Deck we mentioned a few large art sales of both Fidenzas by Tyler Hobbs, and XCOPY. Well, we have more of both incoming following a $370k sale of Fidenza #158 on Sunday, and another XCOPY 1/1 called Five Eyes, which is at auction now at 97 ETH currently. With BAYC and PFP projects on Ethereum cooling off, Bitcoin’s
Ordinals and other chains’ projects have their chance to shine. - Ordinals have taken the top spot in the past 7 days with strong demand, and excitement around Inscriptions 2.0.
- Gamers are gona game, so DMarket’s CS:GO and other games’ skins are hardly impacted by the rest of the market.
- Sorare and their fantasy sports NFTs are usually in the top 10, but it’s in
this new market that they may catch some new eyes. We’ll watch their ranking and see if the affordable, high-volume NFTs can gain more traction similar to DMarket.
- Art Blocks is looking strong again on the back of big art sales, with more expected to keep rolling in. Art is hot.
Real NFT sales are cooling off, but Wash trades are still ramping up. - Ethereum is down as most would expect, but wash trading continues to climb. Will Blur Season 2’s end cool off the wash trading, or will they continue if Season 3 is announced?
- Bitcoin also has
seen its wash trades increase this week, but so did genuine sales. Bitcoin is up over nearly 45% in the past 7 days.
- Solana, Mythos Chain and Polygon are all grouped closely at 3-6, but Polygon had quite a few wash trades in the past week in some a-typical collections. Last week’s report of some new Polygon projects reaching the top 10 Collections by Sales Volume (Weee Did It Palz, The Zumba Warriors, The Flower Powerz, and The Fladers) turned
out to be mostly wash trades. Each collection now reflects those numbers as does the Blockchain Ranking.
|
Capitulation is defined as the action of surrendering or ceasing to resist and opponent or demand, and its use in financial markets just makes sense. Typically securities trade on news, but sometimes you’ll see a price remain mostly stable following big news, when volatility may have been expected. Then suddenly that massive movement arrives in what is described as the market capitulating to the news. From traditional markets to crypto, you’ll find the term used
nearly on a daily basis so it’s good to look for historical times when capitulation occurred. Happy Researching! Received this from a friend? Sign
up for this twice-a-week CryptoSlam VIP newsletter. |
Yohann chats with Edward Lee, a leading legal expert on NFTs and intellectual property. He is a professor of law and co-director of Illinois Institute of Technology Chicago-Kent College of Law’s Center for Design, Law, and Technology, the first U.S. institution devoted to research of creativity, technology, design, and the law.
In his latest book “Creator take control” Edward offers a compelling new theory to explain the meteoric rise of non-fungible tokens (NFTs) and their impact on art, business, entertainment, and society, and explains how they are revolutionizing our understanding of ownership.
In this
interview they discuss:
- Recommendations for collections owners to legally protect their brands.
- How NFT technology and Web3 is related to the birth of modern art in the 20th century and what lesson it provides for the 21st century.
- The explosion of AI and ChatGPT and how they are complimentary to NFTs.
- The theory of
decentralized IP, or De-IP.
- Smart contracts on Ethereum, and lack of smart contracts on Bitcoin.
- How commercial rights for NFTs and Bitcoin Ordinals compare to each other.
- What Edward’s favourite brand-able NFT IP is.
Missed an Episode? Watch all of our previous episodes on Youtube. Don't have time to watch? Listen to all of our episodes, available now on: |
|
