With interest in spot Bitcoin ETFs driving its price, Bitcoin is at its highest in a year and a half. Bitcoin is leading the way out of crypto winter. Meanwhile, interest in non-fungible tokens is falling, with no bottom in sight. What are the investment possibilities of Bitcoin versus NFTs today? When looking at these two investment possibilities, one has a fixed maximum that will ever be produced. The other suffers from production of more than the market is interested in.
NFT Sales Hit Lowest On Record
Crypto News reports that sales of Polygon and Ethereum NFTs on the OpenSea marketplace are at their lowest for the year as of October 2023. Part of the problem has been the same set of things that affected crypto in general, higher interest rates and the descent of regulators on the crypto world. Another is the overproduction of NFTs in a weak market. The plunge in NFT interest has been dramatic. Sales volume of NFTs with a base in Ether were at $659 million in January of 2023, $74 million in September, and half of that in October. Polygon NFTs fell from a trading volume of $109.12 million in February to $4.5 million in September and $2.5 million in October.
Why Has Interest In NFTs Fallen So Badly?
Opinions being offered on this subject include high interest rates and regulatory pressures. We suggest that it is more a matter of market saturation and flagging interest. NFTs are collectables. They fall into the same category as rare coins, stamps, antiques, and works of art. A Picasso or Rembrandt painting is expensive because it is one of a kind. A print of a Picasso is not rare and therefore not expensive. A rare stamp is expensive because it is unique and only a few exist. If you bring your stamp collection to a store that sells rare stamps they will typically pay for your collection according to weight because there are no truly rare stamps. That, in our opinion, is the problem as folks churn out more and more NFTs. Yes, your specific NFT is unique, but all of those funny apes look pretty much the same, so they really are not all that unique.
There Will Never Be More Than 21 Million Bitcoin
The maximum number of Bitcoin, which is programmed into the system, is 21 million and more than 19 million have already been mined. This fact supports the argument that Bitcoin will, over the years, survive and prosper while currencies like the dollar, euro, British pound dwindle. It is also a good argument for how Bitcoin has the potential to grow in value versus the dollar while the vast majority of non-fungible tokens dwindle due to market saturation.
As Profits Fall So Does Interest in NFTs
The most accurate reason for why interest in NFTs is falling is because it is falling. This may sound like circular reasoning but that is how markets work. People buy and sell NFTs to make money. When prices are going up, that makes the task of gaining profits from NFTs easier. Thus, more folks get excited about NFTs and jump into the fray. Then NFT values fall. Folks sell to take profits before the prices fall too far. Then the rest hold on in hopes that the market will recover, but it doesn’t. NFT investors look for reasons like higher interest rates and regulatory pressure on crypto in general. But none of that changes the fact that interest in NFTs has fallen and that folks tend to follow the market in making their decisions. Right now the predominant choice is to get out and stay out of NFTs.
When Do Collectable Prices Come Back?
For collectables to become valuable they have to become rare. Coins go into circulation and become worn. The ones that were put aside remain in pristine condition and become valuable. Likewise, when a famous painter dies there are no more of his or her works and the prices go up. A problem in this regard with NFTs is that they will not wear out and, because they are relatively easy to create, they will still be produced. This bodes poorly for NFT prices going forward and the value of NFTs in the Bitcoin versus NFT competition.
SlideShare Version – Bitcoin Versus NFTs
