The interest in non-fungible tokens (NFTs) might be experiencing a cooling-off period, according to a Sunday (March 6) report from CryptoPotato.
NFTs were a hot commodity last year, and the trend looked to also be carrying over this year. However, the retail interest in NFTs, along with the metaverse in general, seems to be fading out.
Google Trends search data saw both of those things trending downward recently, but the overall NFT trading volume is also supporting that. According to NFT resource NonFungible, the volume per week has been declining for a while now. The retail interest in crypto has also been down, hitting its lowest point since October 2021, leading to lower trading volumes in general.
According to CryptoPotato, bitcoin trading volumes have been doing well in both Ukraine and Russia because of the situation in that region, which has given bitcoin proponents the opportunity to emphasize crypto’s status as an uncorrelated asset to the rest of the economy.
PYMNTS wrote recently that there’s not a great deal of insurance coverage of NFTs, which could be detrimental.
The report noted that Paul Washington, executive vice president of IMA Financial Group, recently said that managing digital assets and the metaverse would mean exploring the risks so clients can prepare. That will include assessing custody for NFTs, of which there’s a gap between their growth and the strategies meant to make them secure.
PYMNTS noted that NFTs are a “complex product” and are worth “only what the market says they are.” This has led to things being heavily influenced by historical value over time.
Additionally, they appear to be susceptible to hacking and theft like crypto is. One example came on Feb. 19 when OpenSea, the biggest NFT market, was hacked and over 250 NFTs were stolen, worth $1.7 million.
As NFTs are purported to be “one of a kind,” it ought to be easy to check if they’re stolen — but there have been two incidents in the last six months of thefts.