For Morgan Stanley, the NFT bubble could soon burst

The fall in cryptocurrency prices in recent months could be the prelude to a collapse in the value of NFTs, warns the American bank in a report. Bitcoin has lost 35% of its value since April. Could the 55,000 NFTs or non-fungible tokens sold by the American start-up Yuga Labs on April 30 for 303 million euros be the tree that hides the forest? According to many experts, it would indeed be wrong to rely on this exceptional episode to judge the health of the market, the hypothesis of the crash seeming more and more credible. Since November, the major cryptocurrencies have been in free fall. They had reached historic levels at the height of the Covid-19 pandemic, but the curve has now clearly reversed. The most famous of them, which is also the most expensive, the famous Bitcoin, has thus lost 35% of its value since April: it was still trading at 41,902 euros on April 1, to fall to 27,283 euros at the time of this writing. According to industry experts, NFTs, which are heavily dependent on the cryptocurrency ecosystem, could be next on the list. Will speculation get the better of NFTs? If speculation is responsible for the bursting of the cryptocurrency bubble, could it also drag NFTs into the abyss? For Sheena Shah, an expert cryptocurrency analyst, "it is becoming clear that the high prices of cryptocurrencies were based on speculation, with very little demand for real use". However, she notes that many NFT buyers have also acquired works of crypto-art with the sole intention of reselling them at a higher price. This is the opinion of the American bank Morgan Stanley, which warns its customers in a long report published on May 12. The institution explains that the significant decline of Bitcoin and Ethereum, the two most stable cryptocurrencies on the market, is not attributable to the decline of the stock market, but to the mechanics of speculation. She recommends investors holding NFTs or portions of virtual land in the metaverse to be on alert: both have been the subject of similar speculation in recent months. The bubble they represent could also come to burst. The report also notes that while cryptocurrencies began their slide in November, it was the recent collapse in early May of TerraUSD, the third most stable currency in the market, that is causing the most concern: this fall confirms the trend and leaves the market without security or stability, "calling for a broad revaluation of the prices at which many cryptos must be traded". Along with the decline of cryptocurrencies, the NFT market itself appears to be showing increasing signs of weakness. A recent report by analytics firm Chainalysis observes that it contracted significantly in 2022 after 'explosive growth'in 2021. While NFT transactions still represented 3.9 billion dollars (3.6 billion euros) the week of February 13, they only reached 964,000 dollars (903,000 euros) the week of February 13 March, their lowest level since last summer. When Coinbase, one of the most popular cryptocurrency exchanges, announced the creation of a platform dedicated to NFTs last fall, millions of users signed up for the waiting list. Since the launch of the project on May 4, the figures seem to attest to a certain cooling: only 1,200 NFT owners have carried out 1,013 transactions for a total sales volume of 252,000 euros. About OpenSea, the main NFT exchange, exchanges also seem to be taking a hit, with less than 245,000 users in March, the lowest level since June 2021, compared to 546,000 at the start of the year. As for Yuga Labs, since its sale on April 30, the young company has been discreet: the cryptocurrency it launched on this occasion, ApeCoin, lost 70% of its value in one month and its famous collection of NFTs, the cartoonish monkeys of the "Bored Ape Yacht Club" series, sees its value melt away day after day: the cheapest Bored Ape has gone from 300,000 euros on April 30 to 170,000 euros on May 23. Could the market be turning around? Seen in Le Journal des Arts - written by Barthelemy Glana

For Morgan Stanley, the NFT bubble could soon burst

The fall in cryptocurrency prices in recent months could be the prelude to a collapse in the value of NFTs, warns the American bank in a...