Macro-driven crypto crash saves NFT floor prices

“Rising prices are reflexively causing investors to pull back,” Fundstrat’s Tom Lee said in a letter to The Block. “This has happened every time.” Minutes from the Federal Reserve’s December 14-15 meeting that suggested the central bank could raise interest rates more quickly to tackle inflation more than previously expected, sent cryptocurrencies like bitcoin and ether tumbling along with risky stocks. and exchange-traded funds such as ARK’s Innovation Fund and Tesla. Low interest rates usually push investors into riskier assets which leads to higher stocks and other assets.

The base price of the boring monkey is up 9% over the past seven days – a period during which bitcoin and ether have fallen in double digits. Meanwhile, Mutant Apes saw their floor price drop by just 1.8%. Over the past 14 days, the minimum price has increased by 54%.

While the track returned during Monday’s trading with the Nasdaq Composite ending the day in green, the potential for a price rally could be a headwind for tech and cryptocurrency stocks. But those concerns haven’t put pressure on non-fungible tokens — a market that covers digital art and collectibles that spans projects like Bored Ape Yacht Club and Pudgy Penguins.

Doodles, another project that has seen its price floor increase by 47% over the past seven days. World of Women, another NFT venture, saw its price floor rise 56% over the same period.

As noted by Osato Avan-Nomayo of The Block, the NFT OpenSea market has seen very strong trading volumes so far this month, which puts it on track for a new monthly record.

In a sense, this goes against conventional wisdom. Indeed, Stefan Owlett, CEO of crypto platform FRNT Financial Inc, noted in an interview with Bloomberg’s Katie Greifeld that “the Federal Reserve is becoming increasingly hawkish” that would hurt crypto prices.

“If they are going to raise rates three times in 2022 and maintain the program, and the era of low rates ends, we will really see how confident people are in their Bitcoin crypto thesis,” he said.

“With, people start selling just because the assets are fungible, so prices can drop quickly,” the well-followed NFT expert said in a Twitter direct message. “You can’t do that easily with NFTs.”

NFT holders seem to stick to their thesis. The reason may be related to the unique nature of these assets. NFTs are not just an investment that you buy with the expectation of a future return (although this may certainly be the case for some holders). It’s also a status symbol with more psychological meaning than bonds, stocks, or even exchangeable cryptocurrencies, as noted by crypto personality “DC Investor.”

“There is an association with NFTs,” he continued. “I think we’ve already seen a few waves of ‘fins’ burning,” referring to traders buying NFTs on a platform like OpenSea to quickly sell them at a higher price in a short time frame.

Chris Perkins, head of crypto fund CoinFund, noted in an email that NFTs have added functionality in some cases that makes them more difficult for their holders to sell. In some cases, NFTs are necessary to participate in different applications or gaming experiences.

The former Citi managing director noted that “innovations such as play-to-earn games have created additional demand for NFTs that may not be related to macroeconomic inputs such as price increases like other asset classes in the crypto space.”

However, if asset prices continue to fall, even NFT will not be immune in the long run.

“I think even within mainstream cryptocurrencies and NFT Bears, we will see continued adoption in certain segments of NFTs, especially for games/in-game items,” said DC Investor.

© 2021 The Block Crypto, Inc. all rights are save. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.

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