High-profile NFT auctions from Beeple, Madonna flop amid crypto crash

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The previous NFT market has become a spectacular crisis, as high-profile auctions fail more and more, and investors who raised millions of strange digital works of art are now struggling to unload them. with a small fraction of what they paid.

Last spring, little-known cryptocurrency artist Beeple sold an NFT for an impressive $ 69 million. This month, he revealed that he had been working with Madonna for a year to create a daring NFT trio depicting the “Material Girl” giving birth to a tree, a centipede and butterflies.

They sold for $ 135,000, $ 346,000, and $ 146,000, respectively.

“It was unexpectedly low,” Nick Rose, founder and CEO of the NFT Ethernity Chain platform, told The Post.

The failure was not uncommon, however, amid the carnage that has recently engulfed the so-called NFTs, or non-fungible tokens, which are unique digital assets in the blockchain often used for art. Last March, Bridge Oracle CEO Sina Estavi bought an NFT from Twitter co-founder Jack Dorsey’s first tweet for $ 2.9 million, calling it the “Mona Lisa of the Digital World.” Last month, it canceled an auction to resell it after the highest bid was below $ 14,000.

“This has been fueled by ridiculously inflated cryptocurrency prices and hysterical deals,” Jeff Bell, CEO of LegalShield, a consumer legal protection company, told The Post. “This is no different than the gold rush or the dot-com bubble where people get ahead of themselves: everyone wants to get rich quick.”

NFTs are being hit in part because cryptocurrencies, the payment method chosen for NFT sellers, are declining along with technology stocks as the Fed raises rates amid furious inflation. Bitcoin BTCUSD,
+ 0.98%
has a 58% discount from its all-time high of $ 69,000 in November. Ethereum ETHE,
—The most widely used cryptocurrency on NFT platforms — also has a 60% discount.

NFT figures look even worse. According to NonFungible, the number of sales is around 24,000 a day this week, disappearing from a September high of 225,000 a day. Cash spent on NFT has also plummeted, with sales last week totaling $ 205 million, nearly 90 percent below its August high of nearly $ 1.9 billion, according to the research firm. .

“The NFTs exploded when the stimulus controls arrived, but they grew too fast,” Rose said. “We are going through a cooling with the stock market, inflation, VOCID and Ukraine.”

Even more troubling, according to some experts: Bored Ape Yacht Club, cartoon images of chained but elegantly dressed primates have generated an estimated $ 2 billion since its launch a year ago, it has recently seen the prices of its NFT tank. This week, its cheapest market available on the OpenSea NFT market was trading at about $ 183,135, a sharp drop from the all-time high of $ 429,000 set earlier this month.

The fall came after Elon Musk changed his Twitter profile to a Bored Apes collage he had done on a Google search, causing a recent craze in which celebrities like Justin Bieber, Paris Hilton, Jimmy Fallon and Steve Aoki they have flown hundreds of thousands of dollars. to vindicate a boring monkey unique and authentic to them. “It looks a little expendable,” Musk tweeted.

However, the creator of the Bored Ape Yacht Club, Yuga Labs, claimed that a recent release of ownership in the metavers worked “unexpectedly” well. And earlier this year, Snoop Dogg launched an NFT collection that cost $ 44 million in five days. Experts say it’s because figures like Snoop and Bored Ape have been building relationships in the niche.

“Key players like Snoop Dogg have done a lot of community building,” Rose said. “No one spends millions on unique articles … the craze has faded,” but creating a loyal following in NFT space will sustain some creators, according to Rose.

Meanwhile, signs of widespread weakness are growing. CryptoPunk # 273, from an NFT collective called CryptoPunk that has created a cult of space by any standard, sold for $ 1 million six months ago. Earlier this month, it cost $ 140,000. In February, Reese Witherspoon’s media firm Hello Sunshine partnered with NFT World of Women. Since then, the minimum purchase for an NFT has dropped to $ 10,000 from $ 34,000.

Concerns about counterfeiting and direct theft have not helped. The Winklevoss twins, who own and operate the Gemini Cryptocurrency Exchange and bought the NFT Nifty Gateway platform, have lost some of their digital art cache after being sued by a user who claims he was tricked into an auction and they tricked him into buying a $ 650,000 NFT he made. I do not want.

“A lot of collectors I know no longer trade there,” Rose said. “I do not.”

A spokesman for the Winklevoss twins did not respond to a request for comment.

One report suggests that 50% of all NFT owners have lost access to their NFT. A user of Discord, a popular messaging application in the world of cryptography and NFT, recently posted that he left out of frustration that it was a focus for the NFT talk. “NFTs are a scam in many cases,” the user said, adding that a growing number of investors are “feeling completely hooked by NFTs.”

The number of active buyers and sellers of NFT in the second quarter has stabilized at around 500,000, down from almost a million in the first quarter and around 700,000 in the fourth quarter of 2021.

Ian Rosen, a partner in The Tifin Group and a former CEO of StockTwits, compared NFT mania to his obsession with cabbage patch dolls or beanie babies.

“People think,‘ Hey, I took a picture and put it on OpenSea! ’” Rosen said. “But just because it exists in the digital world doesn’t make it valuable.”

Still, those in the NFT space remain optimistic.

“With nearly $ 8 billion traded in the first quarter of 2022, the market cannot be considered to have collapsed. We are seeing more of a form of stabilization,” NonFungible notes in a recent report.

Critics, however, point out that it can be difficult to determine which companies are choosing to measure and whether it is accurate. For example, so-called wash trading (when sellers buy their own NFTs with two different accounts) can make platforms appear to have more activity than they actually do.

“You don’t have permission to sell a fake Rembrandt, but here we don’t see that kind of control because people get burned,” Bell says. “There are blatant fraud issues where people raise the price of NFTs by buying theirs.”

This points to a broader problem with NFTs: the growing sector is still new and largely unregulated. Until it’s a more regulated space, users need to protect their pockets.

“Mom and Dad won’t protect you,” Rosen warns. “If you don’t know who the poker table sucker is, it’s you.”

This article was first published on NYPost.com

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