Why NFT is overvalued: expert opinion
No one doubts the prospects of metaverses and investments in them. More and more big companies launch their own virtual spaces and develop their ecosystem there, attracting more and more investments. However, if in the case of metaverses the experts are unanimous in their opinion, then with NFT it is quite another matter. Despite the fact that such tokens are integrated with the virtual world, analysts are rather reserved in their assessment of their prospects.
For example, Kraken Crypto Investment believes that NFTs will not be able to ensure stable demand in the market in the long term. The fact is that their high value is explained by the unreasonably high price of items, but this will not last long. Analysts predict that soon the assets will begin to lose value, and investors’ interest in them will subside.
And the experts are not just sharing their opinions – a downward trend in the market has already been recorded, which is only gaining momentum. If last autumn the maximum level of NFT capitalization was registered, now the figures have fallen by exactly 50% of that estimate. Investors are no longer willing to overpay for digital assets, realizing that they are seriously overvalued. A striking example of this was the sale by NFT of the first tweet on Twitter that Jack Dorsey wrote. It was supposed to fetch $25 million, but the buyer paid only $2.9 million.
According to official data, the number of transactions with non-exchangeable tokens decreased during the current year compared to the previous period. One factor in the decline in demand was the cyberattack on Axie Infinity, which runs NFT games. As a result, its capitalization fell from $10 billion to $2 billion.
So far in 2022, spending in the NFT sector has been $37 billion, last period the figure was $40 billion. However, the market has every chance to exceed the result of 2021.
A number of experts believe that the situation with digital assets will stabilize soon. In their opinion, NFT is a new instrument, and its potential is not fully understood by investors. The first boom with overpricing has passed and soon the price of this digital asset will be more in line with reality. Analysts pay special attention to NFT in the art sector. Experts believe that this area will develop faster than others, but will not become a substitute for a physical masterpiece.
One way or another, however, NFT still lags behind the assets in the metaverses. For example, Realm Corporation bought real estate in the Sandbox virtual space. The transaction amounted to $4.3 million, which was the most expensive acquisition in the metaverses.
