Markets are down, but…
After being around crypto since 2017 and studying the NFT market for nearly the past year, it has become increasingly clear to me that the more we study it, the more we realize we don't know.
Here is one thing that I can tell for certain - no one fully understands the dynamics of the NFT markets.
First off, it is such a nascent market. Secondly, while it is more liquid than the traditional art market thanks to cryptocurrencies like ether, binance coin, tezos, Solana's sol and others, it is still illiquid when compared to crypto or stocks (well, at least during trading hours).
Back to the topic of markets, over the course of the past month, stocks and cryptocurrencies have been trending lower.
While I cannot know, with total certainty, what caused this, it does seem like the largest factor causing the sell-off is anticipation surrounding the impending actions of the U.S. central bank, with Federal Reserve Chair Jerome Powell, aka J-pow, as well as his policy makers, slowing down the money printer.
In other words, the Fed's plans to taper asset purchases and raise interest rates appear to be having a major impact on the global asset markets.
Geopolitical fears and a spike in the COVID-19 omicron variant would generally be a source of market turmoil, but I cannot claim to know for certain that they contributed to recent losses, especially considering how well Bitcoin Market Journal publisher John Hargrave covered the matter of implied causes of market changes (which he called speculative storytelling) last week.
Now here’s the fun part. As stocks and cryptocurrencies have plunged more than 20%, sales of NFTs have… skyrocketed to all-time highs?
Sounds strange, but yes, we’re still in January, and it has already been a record-setting month for NFT sales on OpenSea and across the NFT world.
NFT Sales on OpenSea have topped $4 billion in January, something which has never happened before, and we still have a week to go. This figure is close to 20% more than the previous all-time high, which was in August 2021. How is this happening?
Well, again, I am not exactly sure, but I do know that Britney Spears, Eminem and Jimmy Fallon have all spent substantial amounts of ether on Bored Apes NFTs recently.
Whether it’s apes, monkeys, bulls, astronauts, pixelated images or a combination thereof, it doesn’t seem like NFT collectors or the celebrities buying these tokens are that shaken up by the news of J-pow raising interest rates.
Literally anything could change, and at any time. Today, the Fed announced it was looking at raising interest rates in March.
Stocks immediately jumped, and then within an hour, turned negative on those statements, while bitcoin was largely unchanged over the last 24 hours at the time of this writing.
| 