NFT trading is becoming increasingly popular daily. NFT was at record highs just a few months ago, and celebrities were releasing obscure Ethereum units. Many NFT investors have shown an interest in investing. If you’re new to the world of cryptocurrency and don’t know where or how to invest in the NFT market, here are some tips to help you survive the crypto bear market in 2023.
Signs of a Bear Market in NFT
A bear market is defined as a period in which prices continue to decrease over a protracted length of time.
The period and pricing are the intricacies of the NFT bear market. Because the NFT market changes and evolves at breakneck speed, this “long-run” may be shorter than in traditional markets.
Also, NFT prices are quoted in both ETH and dollars; would you consider it bearish if the price of NFTs lowers in ETH but climbs in dollar value (due to ETH’s dollar price rising)? To be clear, I’ll define a decline as a drop in both the value of ETH in NFT and the value of ETH in dollars, so NFTs suffer a double blow when measured in dollars.
Correlation of Cryptocurrency and NFT Prices
Because they are so closely linked, it’s difficult to discuss NFTs without mentioning cryptocurrencies. The question is, how do cryptocurrency prices affect NFT prices? For the sake of clarity, I’ll solely look at ETH-based NFTs in this discussion.
Because the NFT market is still in its infancy, many new purchasers believe NFTs is still worth a dollar. This implies that if the price of ETH falls, the same NFT that costs 1ETH will be cheaper in dollar terms, making it more appealing to buyers. As a result, in recent bouts of ETH price declines, we’ve observed an increase in the floor price of large NFTs in ETH value.
This inverse link between the dollar value of ETH and the ETH value of NFT, on the other hand, has only been valid in bullish or sideways crypto markets.
If the crypto market enters a bear market, in which BTC and ETH fall below crucial levels and do not appear to be recovering anytime soon, attitude towards the NFT market may be affected. That is, consumers may be less willing to retain ETH, illiquid NFTs for significantly less, and NFT collectors may sit on the sidelines as a result of the general reduction in interest. As a result, the value of NFTs in ETH and dollars may decrease.
Having said that, we have yet to experience a bearish crypto market combined with a bearish NFT market. For NFT’s ETH to climb, the opposite reasoning might be true. In this instance, NFT collectors who believe the dollar is gone and cryptocurrencies are too volatile may wish to invest in blue-chip NFTs and view them as gold/fixed assets for cryptocurrencies.
Making preparations for a bear market
Will the market be bearish or bullish, and how will NFTs respond in different scenarios? Nobody can be certain. Even while I rationalize these judgments, I am making educated guesses and hedging my bets so that I may profit in any scenario.
There are a variety of methods to position yourself, and it all comes down to your risk appetite, comfort level with uncertainty, and holding power. Because everyone’s circumstance is different, don’t consider the following examples as advice; rather, think of them as broad strokes that you may alter to fit your needs.
In the event of a bear market, how would NFTs fare?
Throughout 2021, the immutable token frenzy has swept the cryptocurrency market, resulting in unprecedented growth and adoption for the nascent industry.
During this period, a staggering amount of NFT projects have been released, including artworks, animal-based profile picture projects, “play-to-play” games, and metaverse-focused collectibles.
However, similar to the 2017 “ICO mania,” the great majority of projects launched in 2021 have reverted to their respective “bear markets” owing to poor liquidity, low volume, and near-zero “floor prices.”
Coin Rivet is investigating how NFTs would fair in a downturn market, as well as what may happen if one affects the whole crypto sector…
The PFP (profile picture) frenzy is the initial point of reference. They’re designed to be used as a profile photo on social networking sites and may symbolize NFT ownership as well as flexible participation in a community.
Many projects, such as the Bored Ape Yacht Club (BAYC) and Cool Cats, two of the newest PFP initiatives behind CryptoPunks, didn’t start that way; they were initially published as generalist collectibles with a range of characteristics.
They’ve swiftly become the trendiest property in the cryptocurrency business, and they’ve established themselves as two of the most popular NFTs accessible, following the PFP trend.
BAYC and Cool Cats NFT were the most popular, selling for 769 and 320 ETH, respectively.
The NFT formula, on the other hand, proved difficult to replicate for the general market. ON1 Force, The Sevens, and Mekaverse were all announced as the latest and greatest PFP projects to come out with a lot of hoopla.
They all witnessed significant price hikes at first, but once the initial frenzy died down, they saw a 70-80% decline and have been there ever since.
Because many NFTs have little or no real value other than being “flexible” online and allowing access to the project community, floor prices may continue to fall when supply runs out and no one wants to buy one of 10,000 NFTs.
Outside of blue-chip PFP initiatives like BAY and Cool Cats, it can be challenging to maintain value and relevance for projects with established communities, collaborations, and brand recognition, which might be a precursor to PFP NFT ventures.
Did we discuss the How to Survive an NFT Bear Market in 2022? in this post, as well as the guidelines you should remember when selling NFTs. We hope the post helped answer your query.
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