Cryptocurrency crash brings NFT sales down to new low

Since the start of September NFT trading has shown no signs of recovery amid high inflation and a weak stock market. In the NFT gaming industry sales are down by 93 per cent this year compared with art and collectables NFTs which are down by 80 per cent.  

Galyna Podoprikhina, an Associate at WH Partners speaking with iGamingCapital.mt explains that prior to creating an NFT it is important to consider whether one has rights and permission to the asset and trademark that the NFT represents and that this is backed up by a contract. These types of issues in an unregulated environment have also slowed down the demand for NFTs. For example, the MetaBirkin NFT first sold for about €24,130 and then the price rose to €47,700. In December 2021 a MetaBirkin sold for approximately €19,514. Then just after the lawsuit became public the MetaBirkin sold for €3,697. The MetaBirkin has been removed from OpenSea but is still trading on a few marketplaces.

Dr Podoprikhina adds that “NFT creators should bear in mind that if they want to mint an NFT for a digital asset containing trademarks that they do not own or have a valid licence to use, they need to think twice before doing so”. She refers to the “Hermes vs Rothschilds lawsuit as an example of the value of NFTs falling drastically, this time due to possible trademark infringement”. In this case claims were made by Hermes that Rothschild’s MetaBirkins, a digital art project with ownership validated on the Ethereum blockchain, infringed its federally registered Birkin trademark. Rothschild came up with a counter argument that the MetaBirkins are not commercial assets, as art and expression are protectable under US law. This lawsuit is still in the early stages.

John Stefanidis, CEO and founder of NFT gaming platform Balthazar, in an interview with Cointelegraph believes that the NFT market has “potential to stabilize” and he adds that “whenever there is horizontal growth, people diversify and pull back” but he believes that there will be a steadier gradual growth in the NFT market.

According to an interview with Cointelegraph, Mason Edwards, CCO of Tezos Foundation, an organisation that develops NFT technology, stated that the NFT market is “still not at a point of maturity”. He adds “we’re still going to see people buy a rock for a million dollars.”

In an interview with The Financial Times on the slump in the NFT market, SEC Commissioner Hester Peirce is calling for NFTs to be regulated like stocks or bonds as this would give more confidence to investors. She stated that she would also like the SEC to publish more information on the NFT market and says, “If an NFT were a security and someone did make misrepresentations about it, then they’ve got a securities fraud kind of issue.”

Although the NFT market has plunged 90 per cent across all sectors, experts are still bullish despite the recent dismal performance.