Why NFTs are Dead

Deciding whether you should sell your NFTs and diversify elsewhere? Worried they will never return to their previous highs? Well, this article might not be for you then as I will be outlining the bearish case against NFTs. This conclusion is based on countless hours of scrolling through Magic Eden and OpenSea

Now let’s get down to business. As shown by the abysmal looking chart above you could argue they are already dead or at least dying. Bored Apes have declined from $420,000 in May to $110,000 in august. However, this is a cheap shot. This leads me to some fundamental reasons for their demise.

Fundamental analysis

  • FAD – one word FAD. Perhaps the strongest reason for the downfall of NFTs was the fact they were a product of the time. Similar to BuzzFeed quizzes and furbies we will look back at these images of cartoon monkeys with distaste. Unlike a digital currency like Bitcoin or a smart contract like Ethereum, they might go out of style. But the question is will they return to their former glory?
  • Fungibility who cares? – is this some type of mushroom they may ask? Perhaps the right-click savers are right. Do people really care about non-fungibility and the excessive vanity that comes with it? If people only respect the art of these images and not the digital scarcity represented on the blockchain then perhaps many of them will become worthless. However, this same argument could be made about Picasso. If a forgery is as good as the original then does it make a difference? However, the $100000000 Guinness world records valuation of the Monalisa leaves me doubtful on this point.

Final Thoughts

Overall, I think there are some strong arguments for the death of specific NFTs. Like fashion, there will be trends and these ultimately change. However, I think people ultimately want a rare non-fungible asset that can be stored and transferred with ease. They want to show off. If you want to hear about the bullish case for NFTs please read my previous article.