Non-fungible tokens, or NFTs, are all the rage. But its popularity may have already peaked. Prices for NFTs, the digital certificates that have taken the art and collectibles world by storm this year, have plunged around 70% from their peak in February.
The average price of an NFT on April 5 was about $1,256, down from more than $4,000 at the end of February, according to market research site NonFungible.com. Data from The Block, another cryptocurrency research firm, shows an equally large decline in both NFT prices and sales.
NFTs have been an investing and pop culture craze for the past few weeks, leading some to wonder if the frenzy is a market bubble fueled by wealthy, young traders flush with stimulus money.
A JPEG file by digital artist Beeple recently sold for $69 million at Christie’s. NFTs have helped increase the price of sports cards. Rock group Kings of Leon released their most recent album as NFT.
There was even a recent “Saturday Night Live” parody about NFT. And several CNN Business staffers also wrote about how they forayed into the NFT market by buying cartoon cats.
The NFT craze has helped increase the value of ethereum, the cryptocurrency whose blockchain network is used for a large number of NFT transactions. Ethereum prices are up more than 180% year to date, an increase that outpaces the rise in the price of bitcoin (XBT).
Shares of collectibles companies such as figurine maker Funko (FNKO) and Hall of Fame Resort & Entertainment (owner of an NFL-themed villa in Canton, Ohio) have also soared thanks to partnerships to develop tokens. not expendable. Funko (FNKO) announced last week that it would buy a majority stake in TokenWave, LLC, the developer of the TokenHead app and website that tracks NFTs. Hall of Fame Resort & Entertainment signed a partnership late last month with marketing firm Dolphin Entertainment (DLPN) to develop soccer NFTs,
NFT proponents point out that each token is unique and cannot be replicated, creating scarcity value that is good for both the artists who make them and collectors.
Funko CEO Brian Mariotti made that point in the statement about the TokenWave deal, saying that the investment in NFTs marries the business of digital and physical collectibles.
“The NFT world is all about content,” Mariotti said.
That may be true, but the sudden sharp rise in the value of NFTs and the more recent pullback are reminiscent of some other similar historical market bubbles, such as the tulip mania in the 1600s, the dot com/ technology in 2000 and bank stocks and house prices in 2008.
NFTs may be here to stay, but they may not be worth the staggering sums of money some people have shelled out for them in recent weeks.
Even Beeple, aka Michael Joseph Winkelmann, joked to CNN’s Julia Chatterley in March that he could be the biggest winner in what could become an NFT bubble.