Why NFTs are Still Skyrocketing in Value Even with the Crypto Market Dipping and What Investors Can Learn from That

With the Thanksgiving holiday right around the corner, grandma may ask you over a turkey leg, “What’s an NFT?” Are you ready to politely correct her and show her the future?

Like we do with all of our pieces here at Netcoins Progressive Investor, we’re going to dive into why NFTs are still skyrocketing so you can get grandma pumped up while you explain it all to her.

What is an NFT?

An NFT (non-fungible token) is a store of value that cannot be modified or funged (damaged, replaced, or copied). It may be a digital representation of ownership of a rare piece of art or a collectible stored on the blockchain.

Cryptocurrencies like Bitcoin and Ethereum are not the only tradeable stores of value on the blockchain. The added use case is what truly sets the NFT apart from coins and tokens.

You can purchase NFTs with many different cryptocurrencies. However, most are bought and live on the Ethereum blockchain due to its smart contract properties. That isn’t to say they cannot be created, minted, bought, and sold on other blockchains such as Tezos, Solana, and Cardano, to name a few.

Whichever blockchain you choose for interacting with NFTs, the utility, stability, and longevity all contribute to showing proof of ownership (and putting social status and authenticity on display too).

An Exclusive and Diversified Store of Value

NFTs have created a unique utility that the world has never seen before. We now see some real-world use cases being unlocked such as ownership of rare digital art, play-to-earn video games, fractional ownership, and access to exclusive events. 

All of which adds more stability to the market while still leaving space for so much more. The best part is the use cases are going mainstream. 

NBA star Steph Curry is “aping in” with a $225,000 purchase of a Bored Ape Club NFT. 

Even Snoop Dogg is launching his Etheruem metaverse party. Access to the party is only granted to holders of the 1,000 NFTs up for grabs.

These big purchases by celebrities point to the fact that NFTs are as valuable as the community that wants them. If you have a dedicated social media following, investing in or issuing your own NFTs has the potential to earn you a huge return.

Play-to-Earn Games Merge Community with Profit Potential

Play-to-earn games benefit from the same phenomenon while also allowing video game players a chance to earn a profit in ways large, legacy game companies probably never wanted.

Axie Infinity is undoubtedly one of the biggest stories to come out of the NFT world this year. It’s a video game that allows players to earn native tokens through gameplay, Axie Infinity and Smooth Love Potion tokens. Both of these tokens live on Ethereum and can be burned to breed more characters which can then be sold on the marketplace.

The potential of play-to-earn is highlighted by investments from traditional video game giants such as Ubisoft, which provides more legitimacy and stability.

Younger people are the driving force of the adoption and success of new products, and they love play-to-earn games. These games are not only paying participants, they’re combining everything that’s hot right now, including home entertainment, NFTs, and gaming. That’s a great marketing recipe, isn’t it?

The Numbers Don’t Lie; NFTS Are Here to Stay

In August, NFT marketplace OpenSea had over $3 billion in total transaction volume, surpassing online retailer Etsy.

OpenSea is a platform for buying and selling NFTs. Users can also see the sale history to get an idea of prices. The platform also provides users with tools that show NFT investors what’s trending right now.

Another great tool to research NFTs is CryptoSlam.io, a data aggregator backed by Mark Cuban.

If you want to see what a strong following looks like, take a look at all of the Discord channels and Subreddits dedicated to NFTS, such as Art Blocks, Bored Ape Yacht Club, and the original NFTs that started it all like CryptoPunks and Cryptokitties. Remember, NFTs depend on strong, enthusiastic communities to thrive

Continued Innovation and Investment

The more institutional investors make large investments in crypto, the more stable and mainstream crypto becomes. That growth in value will only see the NFT world accelerate in value too.

Although the prices of the most popular NFTs are out of reach for the crypto-naissant and are only limited to deep holdings of whales. This awareness has led to crypto mindfulness of the exclusivity in the emerging space, producing fractional ownership of NFTs through smart contracts.

Fractional ownership allows an NFT to split into several, even thousands of smaller pieces that many can purchase, which grants more access to buy and spreads out the risk.

Similar to how the regular person is intimidated by one Bitcoin’s $50,000 price tag, not everybody can afford to pay $200,000 for one Bored Ape NFT. 

Fractional ownership demonstrates cryptocurrency’s ethos to be inclusive and bring financial freedom and autonomy to the masses.

What about NFT Winter?

Here in Canada, we have four seasons throughout spring, summer, fall, and winter. Just like financial markets, there are ups and downs. 

Timing your entry and exit can be challenging. However, a missed opportunity does not mean it will not come back around. Don’t lose sight of the fact markets move in cycles. Everything comes back around.

At the end of the famous bull cycle in 2018 came a bitterly cold winter that lasted a long time.

During this time, crypto projects with real fundamentals and a strong community were the ones that repositioned themselves, and ultimately displayed staying power in the market when the next bull market took off. Those are the projects that dominated the DeFi summer of 2020, and they are the ones dominating the NFT space this year.

The mere idea of a bear market strikes fear in many wallets, especially those who buy an NFT at a high price, only to see it go down in value. The true believers of NFTs will hold them over a more extended period of time. They think about the legacy behind what they are holding. They ask, what’s going to be relevant in 10 years? What is the story behind a particular NFT project? How does that story align with the evolution of blockchain and crypto? 

This year we have seen institutional players come into the crypto space purchasing Bitcoin around $50,000. These big players are not buying Bitcoin to take losses. They are holding for real profits that traditional corporations would have never dreamed possible.

NFT collectors are thinking the same way. Especially when it comes to bigger NFT purchases. Yes, there are people who will buy an NFT for $100,000 to try to flip it for $120,000, but for the most part, someone spending that kind of money is holding for the long term. They’re trying to make several times their investment, and curate a collection they can eventually sell for millions of dollars.

Side Note: NFTs Can Be All or Nothing Investments

One key difference between investing in NFTs versus crypto is that it’s much harder to sell fractions of an NFT than it is to sell a fraction of a crypto. You can sell half a Bitcoin, but you can’t sell half of a jpeg image or cool video. You either have to find a way to offer fractional ownership to other people, or part ways with the entire NFT at a loss.

The point is NFT investors are more likely to hold onto something because it’s harder to divide or share it, and also because they may be holding collectibles simply because they enjoy them or they have sentimental value. 

On the flip side, the sentimental value may be all your NFT represents if the community loses interest in a specific project. The dynamics of NFT investing are different from cryptos in these ways and more.

NFT Platforms Continue to Announce New Partnerships

Following last year’s success with NBA TopShot, NFT behemoth Dapper Labs recently announced a new partnership with the NFL who also has an exclusive deal with DraftKings. 

DraftKings reported $375 million Q2 earnings this year thanks in part to their new media and NFT ventures. This is ESPN-worthy big news! The largest sports league in the United States and the most popular fantasy sports and gambling platform in the country coming together is a match made in NFT heaven.

It’s no surprise that Dapper Labs, valued at $9.5 billion, can expand alongside these mainstream platforms. The company is responsible for the CryptoKitties game from 2018, so the experience and community are there.

The adoption of NFTs by social media, which began with Jack Dorsey minting the first-ever tweet, set the pace for integrating social media and NFTs.

The social media platform Tik Tok which has had enormous success during the COVID-19 pandemic is launching its first collection of NFTs this week.

As the entire space continues to mature, big players like Dapper Labs and other digital media firms will establish more partnerships bringing more innovation to the mainstream.

These deals and partnerships will only increase the total valuation and answer the question as to whether or not the entire space has a future. I think the answer is an overwhelming yes!

NFTs Still a Great Play for Investors

Every day new partnerships are announced by traditional corporations and crypto companies, which can serve as proxies of confidence that the NFT marketplace will only get more extensive with more innovative use cases.

As crypto markets continue to grow and mature, there will undoubtedly be a greater risk, but with greater risks comes the potential for greater rewards. The days of the wild west craze of the ICO are well in the rear-view mirror. 

Crypto adoption is still travelling at light speeds fueled by peer-to-peer transactions, currency destabilization, and the desire for financial freedom.

Sign Up for an Account with Netcoins Today

What can you, as a Netcoins investor, do to get a piece of the NFT pie? A great first step is to sign up for a free Netcoins account where you can purchase Ethereum.

You can use other cryptos, an online bill payment or e-transfers from your bank account, and use ETH to interact with NFTs, OpenSea and other platforms that can turn you into an avid collector, get you involved in the community and of course, potentially give you a return on investment.

Welcome to the exciting and ever-changing world of NFTs.