NFTs are collapsing – has the bubble burst?

The prices of digital collectibles such as fine art and sporting goods have plummeted, emphasizing whether the emerging market for so-called non-exchangeable tokens is more than a passing obsession.

Financial analyst Abdullah Mashat said in an interview with Al-Arabiya that the collapse in non-tradable assets came after the price frenzy that fueled the movements of individual speculators who entered a new market.

He explained that there are digital assets and digital signs in different applications, indicating that the price madness achieved was aimed at gaining the biggest and fastest advantage in this market.

He pointed out that some of this type of asset fetched fantastic prices last month, until a painting was sold for $ 69 million.

He added that the most important use of these non-replaceable symbols will be in future artboards, which guarantee the value to the owner of the design and the date of his / her design, and therefore NFT technologies will help to solve the problem of intellectual property rights for digital assets.

Average prices for non-exchangeable tokens – which are tradable digital certificates and use blockchain technology to prove asset ownership online – have fallen almost 70% from their February high to around $ 1,400 on average, according to Nonfungible.com, which tracks the Variety group of token markets.

It comes as growing interest in NFTs peaked last month when a digital artwork by Beeple was sold for $ 69.3 million, according to Bloomberg, and seen by Al Arabiya.net.

Some argue that the non-exchangeable tokens were one of the results of the huge stimulus processes of central banks around the world and are doomed to disappear with the end of these plans. Others who study the technology claim that using blockchain to create a digital scarcity is a perpetual innovation rather than a buzzword.

“It is not possible to describe the concept as a financial bubble,” said Chris Wilmer, scholar at the University of Pittsburgh. He pointed out that non-exchangeable tokens are not in a bubble compared to cryptocurrencies.

Sales of blockchain-based digital assets were already underway in 2018, when 10 collectors paid $ 1 million for a digital photo of a rose.

Despite the decline in trading volumes and average prices from recent highs in February, other data shows that many NFTs are still registering big gains for 2021. In the first quarter, the market value of the 38 non-tradable assets tracked by the CoinMarketCap platform increased more than eight times to reach $ 22.5 billion.