According to the largest platform for the emerging digital asset class, non-fungible token (NFT) sales spiked in August as speculators bet that growing interest in the art, sports and media worlds keep prices rising.
The niche crypto asset, which is a blockchain-based record of ownership of a digital item like a picture or video, exploded in early 2021, leaving many confused as to why so much money was being spent on items that did this do not physically exist.
The intoxication has now reached new highs. Sales volume on the largest NFT trading platform, OpenSea, reached $ 1.9 billion so far this month, more than ten times the $ 148 million in March. In January 2021, the monthly volume recorded on the platform was just over $ 8 million.
The jump was driven by aftermarket sales, OpenSea said.
“We have seen some NFT collections pop up in the past few weeks that were very successful and sold out at launch. That activity then moved to OpenSea, where buyers would like to exchange their NFTs for a higher price, ”said Ian Kane, a spokesperson for DappRadar, which is tracking the market.
Reuters found an NFT depicting a picture of a cartoon monkey that was sold last week on OpenSea for 39 ETH – the cryptocurrency ether – (about $ 124,205 at the time of purchase) from an account that was available for two weeks for $ 22 .5 ETH (61,329) USD earlier, according to the analysis platform Etherscan.
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Another NFT of an abstract digital artwork that sold for 1,000 ETH ($ 3,322,710) on Monday was sold for 0.58 ETH ($ 1,366) in June.
NFT market data varies based on vendors’ methodology, but DappRadar recorded 32 known NFT sales over $ 1 million in the past 30 days.
MichaelK, a 30-year-old NFT buyer who refused to give his full name, said he had spent about $ 250,000 on NFTs since September. He said he kept 90% of his assets in cryptocurrencies and NFTs.
Earlier this month, he bought a cartoon penguin NFT for ether valued at around $ 139 and sold it four days later for around $ 3,956, according to Etherscan.
Other instances of high-yielding “flips” can be seen on his OpenSea account, including a cartoon-ball NFT that was bought for 0.01 ETH ($ 33) and then within seven hours for 1.5 ETH ($ 4,900) ) was sold.
MichaelK said the Federal Reserve’s ability to control the money supply played a role in its decision to speculate on largely unregulated crypto assets.
“When people hear these stats, they might think I’m completely crazy … I look back and say you hold a currency that is printed every day, to me you are crazy.”
He said COVID-19, which is forcing people to spend more time at home and online, has helped NFTs get started.
“I don’t want to think of it as a bubble. I want to see it as something new that is going to be a big wave, ”he added.
Rising cryptocurrency prices could also have played a role in the surge. NFTs are often valued in ether, which was up around 23% in August.
Rabobank’s head of financial research for Asia Pacific, Michael Every, said he was “surprised” by the “bubbling stupidity” of the NFT market.
He said he saw the appeal of high returns for young people who would otherwise struggle to build wealth or climb the corporate ladder, but compared that to buying a lottery ticket.
All of the said NFTs were a bubble that would “absolutely” burst.