In the crypto world, there’s a saying that goes: “When it’s good, it’s good. But when it’s bad, it’s a bear attack.” Nothing proves this more than a bear market, in which people sell their cryptocurrencies rather than buying it. Because NFTs are constructed on the same infrastructure as cryptocurrencies, bear markets have a large impact on their sales. Let’s delve deeper into this issue and look at how a crypto bear market affects NFTs.
Bear markets are part of a cycle in which prices fall over an extended period of time. They are not specific to the cryptocurrency industry; they may also be found in stocks and commodities. During a bear market, the value of cryptocurrencies drops by at least 20% of their previous value. This price reversal could be caused by a variety of market conditions.
Depending on investor attitude, a bear market can endure for months or just a few weeks. A crypto bear market is an excellent investing opportunity. Bear markets varied historically and do not follow a predictable cycle. A bear market can run up to 289 days on average, but it can be longer or shorter.
Understanding NFTs
Non-fungible tokens (NFTs) are assets that have been tokenized using blockchain technology. They are given unique identifying codes and metadata that set them apart from other tokens. NFTs can be traded and swapped for money, cryptocurrencies, or other NFTs, depending on the market and owner value. Non-fungible tokens (NFTs) are one of the fastest growing assets in the crypto industry. In this article, we are going to introduce you to some of the applications of NFTs, tell you how you can buy and sell them, and explore how they might be used in the future.
How are NFTs used?
Because NFTs are one-of-a-kind, they can be used to value and authenticate the ownership of digital assets, including virtual land parcels, artwork, etc. One of the biggest markets for NFTs is the entertainment industry.
Can the bear market affect NFTs?
During bear markets, NFT sales often decline. This can have a number of consequences, including an increase in the quality of NFTs relative to the quantity, smaller NFT marketplaces falling behind, and token initiatives providing more usefulness to their communities. People are less receptive to the idea of NFTs in a bad market, which is understandable given how tough it is to profit from them. Let’s take a look at how bear markets affect NFTs.
AN INCREASE IN SKEPTICISM
The bitcoin community is being choked by bear markets. Because prices are falling during this time, investors are becoming increasingly wary about blockchain-related products, particularly NFTs. People that buy NFTs may struggle to sell them for a profit if there is no market for them.
During uncertain times, there is also a natural tendency to hoard money. Apart from the larger efforts, such as the Bored Ape collections, many collections see decreased demand during this time. On the other hand, this makes creators more community-focused, because having a network of people who believe in their work makes it simpler to find consumers even when the market is down.
According to Dune Analytics statistics, NFT transaction volumes across several platforms decreased by 97% between January 2022 and October 2022. After peaking at $17 billion in January 2022, trading volume has dropped to $500 million. Surprisingly, trading activity in domain NFTs such as the Ethereum Name Service increased at many points throughout the year, even as NFT collections continued to drop.
Although OpenSea remains the marketplace leader in terms of volume and transaction counts, the exchange’s weekly transaction volume fell from more than one million in January 2022 to around 250,000 in November 2022.
MORE BUYERS THAN SELLERS
You know a market is in a down turn when they are more seller than buyers. In a bear market, People are more likely to discover ways to sell off their NFTs to avoid losing money in bear markets because there are a lot of unfavorable headlines. This is especially true when the decrease in cryptocurrency prices and NFT sales shows no signs of abating.
Imagine purchasing an NFT for $1,000 during the peak of the bull market (when cryptocurrency prices are high and many people are buying NFTs). During a bad market, the value of the NFT may fall to $500. Naturally, you have two options: cut your losses and sell it, or wait for the price to climb again. People are more inclined to pick the former option in bear markets, admitting their losses and selling their NFTs. Others see this circumstance as an excellent opportunity to buy NFTs at low prices and sell them later for a profit.
While bear markets are frightening times, you will feel more confident trading when you have good knowledge of what to expect. That being said, always makes appropriate research before carrying out any trading during bear market in order to avoid huge losses.
Exchange platforms still offering good rates in the bear market
Astro Africa is one of the few platforms still offering good rates in the midst of the bear market. The platform sells cryptocurrency at the best rates to help its customers maximize their profits whilst providing the best crypto trading services. Visit www.astroafrica.site to get started and trading.
