Trading volume of NFTs is at an all-time high. Last week, the trading volume of the fifth most popular NFT collection in history Bored Ape Yacht Club surpassed $131 million, with a growth of 69%. Total trading volume from one of the first NFTs CryptoPunks is now more than $1 billion. Trading volume from this NFT exceeded $301.7 million last week, the highest of any NFT in the same period.
A niche dominated by speculation
Few digital asset niches attract as many speculators as NFTs. Increasing public interest in digital media, sports and art collections continues to drive prices higher. NFTs are literally the supernova of the in DeFi‘s universe. They are the most popular product on the Ethereum network. The world’s largest peer-to-peer marketplace for NFTs OpenSea reached $1.58 billion in trading volume last week, up 72.88%. Daily trading volume on the marketplace, which accounts for one-fifth of all transactions on the blockchain, peaked at $302.6 million on August 29.
The potential of NFTs – and the risks
Those wondering whether investing in NFTs is worthwhile must consider the enormous potential of this asset class. By encoding media, sports and art assets in an NFT, the artwork becomes a unique specimen for the purposes of ownership and authenticity, at least in theory. CEO of Australian cryptocurrency exchange BTC Markets Caroline Bowler said:
It opens up a new frontier and tears down another wall in what we think of as the real world. Until now, such proof of ownership has been lacking. NFTs create a format where artists can prove what their work is and what belongs to them. We all have digital content like our Facebook page or a tweet that we believe is ours. But one of the most important facets of ownership is the ability to sell it.
Get past the hype
NFTs are hyped by celebrities, and tens of millions are spent on them. But the market is far from proven. Is this a bubble? Is it justified to spend so much on stuff that doesn’t physically exist and some of which is anything but impressive? Can anyone “own” a painting that can be seen in the digital world can copy in seconds?
Yet NFTs have something in common with traditional art – subjective value. Their prices and transaction volumes are increasing exponentially. Investors will have to figure out if every piece they buy will have value in the future.