NFTs – down but not out

Non-fungible tokens, better known as NFTs, became the talk of the art world in 2021 with wackily named digital images like the CryptoPunk and Bored Ape Yacht Club series regularly selling for millions of dollars

But by the end of 2022 the embryonic sector was already reeling, hit by the contagion from the fall from grace of crypto evangelists such as Sam Bankman-Fried and the slump in Bitcoin and other cryptocurrencies. Buyers did, though, still purchase around US$1.6 billion-worth of Bored Apes last year, according to CryptoSlam. However, the vast majority of that trading took place between January and May, with starting prices falling from a peak of US$429,000-worth of ether in April to a low of under US$60,000 in November. Evidence is also surfacing that some of the highest NFT prices achieved were not genuine transactions. Although secondary market evidence for NFTs is still sparse, Sebastian Duthy of analyst Art Market Research says comparable works sold over two seasons suggest values are down around 50%.

Digital dilemma

HNW Pulse Survey respondents share their views on NFTs

The views of respondents to our HNW Pulse Survey are evenly split when it comes to NFTs. Around a third believe they still have potential, while an equal number say they have always been sceptical. Interestingly, respondents from the Chinese mainland were more upbeat, with 64% retaining a positive view. They may well be right, although even some of the highest profile collectors admit that many of the NFTs they have bought are probably worthless.

“I am convinced that blockchain technology and digital art are here to stay and develop,” says Elena Zavelev, co-founder and CEO of CADAF, the Crypto and Digital Art Fair, and founder of art and tech education platform New Art Academy. Writing on the future of NFTs in the Collectibles Insights Report, published by ArtTactic and Cultural Comms, Zavelev adds: “We can expect more experimentation and intrinsic artistic value to enter the market, and I am also hoping for less speculation and more attention to the substance.”

Fellow contributor Tom Grogan, a tech consultant at MDRxTech, believes NFTs will eventually be seen as just another medium for artists. “My deepest hope for the NFT market is that in 10 years’ time nobody knows what blockchain is, nobody knows what NFTs are and no one remembers crypto, all despite using them seamlessly within our everyday technology stacks.”