One of the truly defining moments of the most recent crypto bull market was NFTs.

NFTs, Non Fungible Tokens, seemingly came out of nowhere into rapid adoption and cultural euphoria, ushering in participation from everyone from politicians to celebrities to venture capitalists.

Bored Ape Yacht Club and CryptoPunks were selling for millions of dollars, OpenSea raised capital at a $13.8B valuation and the ecosystem of NFTs was absolutely thriving on every level.

‍But there was a problem: as potentially the most risky asset imaginable, NFTs were punished for the exact same thing that popularized them in the first place, which was the begging and end of a speculative mania.

• As markets adjusted to inflation and interest rate heights, capital rushed out of NFTs en masse
  
• Since there is little to no institutional investment in NFTs, once the exuberance of retail investors disappeared, NFTs as a whole suffered a liquidity crunch and massive price drops across the board
  

The numbers:‍

• At the height of popularity and speculation in January 2022, NFT trading volume exceeded $5B USD for the month
  
• A year later in January 2023 saw trading volumes drop to $1B USD
  
• As of July 2023, trading volumes were $495M USD, down roughly -90% from all time highs
  

The fine print:‍

• While prominent NFT collections have seen prices fall between 60-90%, NFTs are clearly far from over. There is still tremendous developer activity and new projects being launched, with leading NFT marketplace OpenSea seeing a constant influx of new NFT collections launching
  
• NFTs are largely denominated and priced in ETH, which is down roughly 50% from the highs of the previous bull market, which in turn affects overall trading volume and pricing of individual NFT collections
  

What’s happening now:‍

• While the mainstream culture has largely forgotten about NFTs, many new projects continue to get launched to enormous success
  
• Jack Butcher, known for his design prowess, launched “Checks” on OpenSea, which debuted to huge excitement and has traded over $100M USD in volume since launch
  
• The studio of legendary American painted Jackson Pollack launched an NFT collaboration, which sold out instantly in their mint, bringing in over $450K USD
  
• Cristiano Ronaldo just entered into a new partnership with crypto exchange Binance, which will have an exclusive focus on creating NFTs. Ronaldo dropped his first NFT collection last year which brought in $6M
  
• Popular NFT collection Pudgy Penguins has taken an IP approach, launching physical merchandise and signing a media deal with Hollywood agency WME
  

Going deeper:‍

• Recently, former crypto hedge fund Three Arrows had their NFT collection liquidated in a Sothebys auction as part of bankruptcy proceedings, which brought in approximately $17M and showed their is still real demand for NFTs from collectors
  
• Many big brands continue to announce plans for NFTs, with even Starbucks recently launching an NFT collection
  
• While the original state of hype and speculation around NFTs may not return anytime soon, many speculators, collectors and investors seem to be taking a longer view of the space, believing digital, generative art with proof of ownership still has a lot of upside ahead

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