Well, that was a wild 12 months.
After writing numerous articles about NFTs over the previous few months, I understood the concept fairly well when I got my first official pitch.
“Non-fungible tokens are the wave of the future,” is what my roommate told me as he attempted to convince me to sign up for a waiting list to secure my place in line to be able to buy official NFL NFTs once they dropped.
And I did sign up, because it cost me nothing to do so and acquiescing was the only way to get my roommate to leave me alone.
But the constant media attention surrounding NFTs, which as a journalist I was a part of, made me uneasy about investing.
Shortly after my roommate’s pitch, late-night talk show host Jimmy Fallon was showing off his Bored Ape Yacht Club NFT on Twitter.
Then Fallon had Paris Hilton of all people on his show to talk about her BAYC avatar, and that is when my suspicions that NFTs were an untenable bubble were cemented.
Who in their right mind would take investing advice from Paris Hilton? Jimmy Fallon would apparently.
The next sign that NFTs are a bubble was the emergence of ancillary investment vehicles tied to popular NFTs.
But this week, we may have gotten the biggest sign that not only are NFTs a bubble, but that the bubble is also about to burst.
Jack Dorsey’s Twitter NFT Isn’t Fairing Well
Last March, as the NFT craze was just starting to emerge, crypto entrepreneur and Bridge Oracle CEO Sina Estavi bought an NFT of Twitter (TWTR) – Get Twitter, Inc. Report founder and former CEO Jack Dorsey’s first tweet for $2.9 million.
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Last week, the Iranian-born entrepreneur announced that he would sell the NFT and donate half of the proceeds to charity.
On Wednesday the auction closed, and instead of the $25 million Estavi anticipated, the top bid came in at just $6,200, according to the BBC.
Estavi told the news service that he may never sell the tweet unless he received a “high bid.” In the past, Estavi has likened his NFT to the Mona Lisa.
“Last year, when I paid for this NFT, very few people even heard the name NFT. Now I say this NFT is the Mona Lisa of the digital world. There is only one of that and it will never be the same,” Mr Estavi said, according to the BBC.
After you are finished rolling your eyes at that statement, understand that Estavi’s level of enthusiasm for digital assets that have no intrinsic value has become rampant over the past 12 months.
Signs That The NFT Bubble Has Burst
At the start of 2021, there had been 5.2 million NFT sales totaling $162 million over the past four and a half years. More than a year later, that total was up to 41 million NFTs sold totaling $25.8 billion.
But 2022 has been a rough year for NFTs.
Back in January, the average sale price of an NFT was over $6,800 with daily sales of $160 million.
About three months later that average sale price is down to $2,000 with daily sales of $26 million in March, according to market tracker NonFungible.
Primary sales of NFTs are also down from nearly 26,000 per day at the start of the year to less than 3,200 last month. Secondary market sales dropped from a January peak of 38,000 per day to just over 7,900.
With inflation that rampant a correction was only a matter of time. But now NFT investors have to decide whether the current market represents just a correction, or has the bubble already burst on what was once considered the next revolution in investing.
Editor’s Note: Tony Owusu is a reporter for TheStreet.com.