Are we really entering an NFT bear market? That’s the hottest discussion point in the NFT circle these days. With the number of unique NFT buyers falling below 800,000 to break a three-month streak, some are understandably getting spooked. In addition, February also saw a 40% decline in sales volume from January’s $4.4 billion.
So how are NFT collectors, enthusiasts and influencers taking what CryptoSlam dubbed as a “mini-bear market”?
NFT Bear Market: Fact or Fiction?
NFT influencer Beanie (@beaniemaxi) is bearish over the market. In fact, he boldly declared that “2022 will be the year that the NFT Class of 2021 will be begging for their day jobs back in the midst of an epic recession.”
Crypto Twitter immediately jumped into the thread and gave their two cents’ worth about the market conditions. @fiatngmi fired back at Beanie and accused the PixelVault co-creator of FUDing. He wrote, “Translation: Now that I’ve sold my bags, I’m happy to fud the space as much as I want. Remember when you said and I quote, ‘BAYC chart is not a blow-off top, or anything close to that.’ That was when the floor was 100 ETH and you owned multiple.”
Overall, the market remains optimistic. Despite the uncertainty in the global market because of the war conflict in Ukraine, many NFT investors are hoping the new digital asset class can prove itself as a worthy option. The confidence is still high because the NFT came through during the Covid-fueled March 2020 market crash.
In fact, the NFT market has shown resiliency. NFT Trading Volume continued to increase despite the crypto crash last May 2021. The marketwide crash saw Bitcoin lose 30% of its price. It also wiped out more than $1 trillion off the crypto market cap. In effect, almost one million traders were liquidated in one day. Despite this, users continued to purchase, trade and sell NFTs.
CryptoSlam chief marketing officer Yohann Calpu is confident that the market will bounce back. He told Forkast that “historically, NFT bear markets are very short-lived and given the 70x of NFT sales since November 2020, a cool off is expected.”
NFTs vs. Market Crash
It is either a bear market or a bull market in the Crypto world. A bear market is when a market experiences prolonged price declines. A bull market is the condition of a financial market in which prices are rising or are expected to rise. 2021 falls under the bull market, with BTC reaching its all-time high. Meanwhile, NFT Trading volume is not dependent on a financial cycle. The volume is a function of interesting NFT collections and projects.
NFTs are also speculative assets but are proving to be bullet-proof against market crashes. This is because NFTs have utility not affected by speculation. Yes, there are NFT holders looking to make a margin from trading their NFTs. However, most holders are collectors and acquire NFTs with the intention of keeping them. This is particularly true for 1:1 Collectibles.
Generally, altcoin prices follow the price of Bitcoin. This tends to be because altcoin buyers generally purchase Bitcoin with fiat currency (like dollars and euros) and then exchange it for their chosen altcoin. Meanwhile, NFTs can also be purchased directly via debit or credit card on some platforms. So the market’s volatility does not affect the purchasing power of the users.