The non-fungible tokens (NFTs) market was – and still is – at the center of attention in Brazil and in the world, with an emphasis on celebrities. Celebrities like Neymar Jr., Justin Bieber, Madonna and several others spent millions of reais with the purchase of NFTs, drawing even more attention to this market. However, the arrival of the “crypto winter” has also affected the prices of digital collectibles. Some NFTs have devalued nearly 90% in a five-month period.
Fall of NFTs
The price drop was undoubtedly painful for the approximately 5 million people who own at least one NFT in Brazil, according to Statista’s Digital Economy Compass 2022. In fact, Brazil is the second country in absolute numbers regarding NFTs, behind only Thailand. Despite this, NFTs offer more than the possibility of enrichment. At least this is the opinion of Cássio Krupinsk, CEO of the fintech of digital assets marketplace and investments BlockBR. According to him, innovation and digitalization are important attraction factors. However, what made most of these people interested in NFTs was the high volume of trading. Over the course of 2021, for example, NFTs moved around $40 billion, according to ChainAnalysis. “NFTs are assets that represent experience, influence and a sense of belonging,” he said. “They represent something unique in their digital and encrypted version. Music, digital arts, images, among other intangible assets gain space within this model. Blockchain technology protects copyright with the smart contract and facilitates its distribution among consumers and especially collectors.” In other words, for Krupinsk, the main objective is to promote this experience that unites creators and their audiences. On the other hand, those who buy as a financial asset, with an interest in resale in a possible appreciation, “will probably die with it in their hands” as well as in the art market. “The person who buys a Picasso wants to exhibit the painting, appreciate it and share it with their family and friends. Can you resell in the future and earn with a possible appreciation? Yes, but that is not the central idea,” he exemplified.
NFT is bubble?
For Krupinsk, the NFT sector is experiencing a speculative bubble like so many others that have occurred over time. He believes this bubble is about to burst. That’s because the total transactions of these tokens dropped 47% in the first quarter of 2022 compared to the previous quarter, according to data from the NonFungible platform. On February 13, 2022, transactions were close to BRL 21 billion, but a month later, they had already dropped to BRL 5 billion “The indicators are clear. But, as in every bubble, there is a strong tendency to market rather than monetize and raise awareness. In other words, transacting as much money as possible instead of ensuring greater understanding of the topic and promoting truly valuable business for users”, he highlighted. In the end, when this boom passes, the executive believes that NFTs will deliver the only thing they can: experience and a sense of belonging. He considers, however, that it is okay to see NFTs as sources of investment. However, it is important to understand which ones actually promise to deliver financial returns and which ones are used for other purposes. Also read: Analyst explains why AVAX price rose 50% in 10 days Also read: Pension fund loses $150 million on investment bet on Celsius , says billionaire investor
