In 2021, nonfungible tokens (or NFTs) have taken the cryptocurrency industry by storm. These digital collectibles have been gaining popularity and resulting in record-breaking trading volumes in August. Individual NFT sales exceeded $1 million annually.
It can be hard to decide which rare collectibles are worth their high price, with so many NFTs on the market. NFTs, while becoming mainstream, are tied to cryptocurrency and are therefore prone to market volatility.
Data shows, for instance, that NFTs were traded on the top marketplaces at a lower volume than usual in September. This coincided with Bitcoin (BTC), which dropped below $43,000.
Discovering the hidden value of highly sought-after NFTs
Despite the fact that NFT trading volume continues to decline, highly-respected projects like CryptoPunks or EtherRocks continue to see high-priced sales. These were the first pieces to appear on the Ethereum blockchain. However, Andrew, the founding chief marketing officer for Reserve.org stablecoin project, stated to Cointelegraph that he believes EtherRocks will continue to grow in value because only 100 of them were ever created. “Punks and Rocks and Kittens are the classic 2017 ‘art of Ethereum crypto. There are only 100 rocks, but there are thousands upon thousands of kittens.
Andrew echoed Snowfro’s statement that Art Blocks is an NFT art platform. He said that CryptoPunks are independent from the market in general. They stated that there are only 10,000 of them and that it is clear that more than 10,000 people would like to own one. Therefore, they believe there will always be strong interest.
EtherRock 73 purchased for Ks790 Ether ($2,607,584.60) 10 hrs 50 mins ago (Sep-07-2021 08:03:49 PM +UTC) Txn: https://t.co/wo403bWFPC #EtherRock #EtherRocks pic.twitter.com/01lhQOoye0
— September 8, 2021, EtherRock Price (@etherrockprice).
The limited supply of EtherRocks and CryptoPunks means that EtherRock owners may be less likely to sell. Andrew says that EtherRock owners won’t sell because they want to be part of crypto history. “Van Gogh pieces are highly valued because of their historical importance,” Andrew said. Andrew said that EtherRock NFT holders automatically become members of an exclusive club which triggers high prices for EtherRocks. It’s almost like ancient art.
Fungibles, Greenleaf Ventures CEO, said that he purchased his EtherRock from Cointelegraph after receiving a personal message about the project from Gary Vaynerchuk.
“There were only three remaining rocks selling for 8.5 ETH each at the time. It was 2017 and only 100 of these rocks were ever made. I felt positive about the project. I pulled the trigger, and sent out a tweet explaining why I bought a $24,000 rock.
Fungibles noted that EtherRocks are a rare and historical project. “If this project takes root, it will show that there is something beautiful in something so terrible looking that could eventually reach zero.” This is the perfect meme and collectible.
Fungibles pointed out that many of today’s most highly sought-after NFTs provide access to their owners. He explained that EtherRock ownership gives individuals access to exclusive gatherings all over the globe and allows them to vote on certain items that could help increase the EtherRocks’ value over time. “Communities are coming to this token, which means that you can gain access to certain things. This is a long-term investment for me.
SkyBridge Capital founder Anthony Scaramucci told Cointelegraph that Flatter, an NFT platform that offers exclusive experiences and sought-after collectibles, was just launched by SkyBridge. Flatter, Scaramucci says, aims to expose collectors of traditional art to a wider market, where they can enjoy digital art and experiences in an exciting and unique way. Flatter NFT owners will have exclusive access to events, shared experiences, and early access to special happenings.
Flatter, despite being just launched, could showcase the many possibilities NFTs offer traditional investors, particularly as established art collectors start to get into the NFT sector. Noah Davis, specialist in digital art and head of online sales at Christie’s spoke on the NFT panel at SkyBridge’s annual SALT Conference. He mentioned that many established collectors participated in Christie’s Andy Warhol NFT Auction in May. Davis pointed out that three-fifths of the five collectibles were purchased by blue-chip buyers and that there is a shift towards NFTs in the real world.
Too much supply but not enough demand?
Although NFTs that are highly sought after may possess certain features, a steady stream of new NFTs is flooding the cryptocurrency market every day. These NFTs are rare, have unique features, and are easy to find, but it remains a question whether there is enough supply or not. Additionally, NFTs will lose value over time if this happens.
Jason Lau, chief operating officers of cryptocurrency exchange Okcoin told Cointelegraph that NFTs could eventually be created by anyone who has internet access, but that only a smaller number of people are interested in owning them.
“Eventually, demand will outweigh supply. This is much the same as any other creator-based economy. NFTs are still in the early stages. Owners and creators are doing a lot of research. How we reach equilibrium is yet to be determined.
Snowfro is more skeptical, however, pointing out that “too many supply” is counterintuitive when there are hundreds of artists who want to show their work in a way never seen before.
Related: NoviFT? Facebook’s NFT support might not be enough to encourage crypto adoption
Lau noted that NFTs are often compared to traditional art in terms of their value over time. He believes that NFTs may lose some value due to the potential oversupply. However, others will increase in value as new creators emerge and more experiences are created.
Santiago Roel Santos is a decentralized finance investor who also told Cointelegraph that while not all NFTs will retain their value, he expects to see the next Picasso emerge out of this movement. “At this stage, every major artist creator and studio is thinking through NFTs and having a strategy.” However, Fungibles is optimistic even if some value is lost.
“There will be an bear market and some NFTs will be lower than today. However, this will allow new buyers to enter and EtherRocks to be changed hands. There will always be a market, regardless of price.