There is no doubt that there has been an influx of enthusiastic investors rushing to be present on Web3 and this despite the decline in total sales volume over the last seven days. Since the beginning of May, the total market capitalization of non-fungible tokens (NFTs) rose to more than $19.44 billion and total volume exceeded $1.3 billion in the last seven days.
Although the volumes are lower than usual, viewers are quick to wonder if the projects being launched offer viable products, given the amount of liquidity being pumped into them. Although this is not always the case, investors in NFT make their assessments based on the roadmaps, announcements and projections that the team shares. However, given the speed at which the nascent NFT sector is moving, diversion and roadblocks are to be expected when investing in them.
Notable projects and “blue-chip” NFTs like Cool Pets’ Cool Cats, Axie Infinity, and even Bored Ape Yacht Club (BAYC) have slightly deviated from their intended plans, slightly dampening their users’ enthusiasm. While this has clearly worked well for BAYC, it is important for investors to understand that investing capital based on the promise of a roadmap could ultimately lead to disappointment.
The unpredictability of growing pains
It’s exciting to come across a project that seems to be on another level. The project can tick all the boxes and the team has proven to have previously developed a product that works, the art resonates with diverse groups of people. If the community is strong and unites around its belief in the project and is backed by a desirable roadmap, then investors feel convinced that they have stumbled upon a winner.
Of course, all this is no guarantee of success.
Take Cool Pets, for example, which launched on January 31 and intended to launch its play-to-earn (P2E) game, Cooltopia. A few technical hiccups delayed the launch and caused many NFT traders to lose faith in the project. Also, on April 29, Chris Hassett, former CEO of Cool Cats NFT, stepped down and the company is looking for a replacement.
We’re on the hunt for a new CEO!!
Chris Hassett has stepped down as CEO. We thank him and wish him the best moving forward. We’re working with a top tier firm to help find a world-class CEO. In the interim, the founders will lead and focus on the vision and direction of CC— Cool Cats (@coolcatsnft) April 29, 2022
Often the biggest impediment to a project’s success is the unforeseen that can create logistical issues, but it’s important to keep in mind the difference between “good” and “bad” issues. For example, accelerating growth can create strains on a project’s ability to scale safely, but it often puts a target on it.
Axie Infinity was not immune to a social engineering hack that resulted in a $625 million hack representing one of the largest cryptocurrency exploits in history.
Currently, the Ronin bridge that transfers funds to the Ethereum mainnet is closed. This means that user capital is currently locked on the Ronin network until a full audit is completed. This unforeseen event has left investors with their capital locked up, and their in-game tokens in a strong downward trend. In light of this, the morale community has seen some of its toughest days with investors voicing their opinions on how to proceed.
Market cycles can affect morale
Accelerating growth can not only put a project on the bullseye, it can also lead to too many cooks in the kitchen experimenting with new ideas. Often, as a project’s user base grows, so does the number of opinions about what is best for the future and sustainability of the community and the project. This is where speculation begins to arise and expectations form.
Yuga Labs Otherdeed digital lands NFTs are converted in the most anticipated mintage for 2022 so far, with speculated value propositions of over $110,880. Most of these values were attributed to rare Koda NFTs, which were randomly scattered throughout Otherdeed lands.
Since the mintage was originally listed on ApeCoin, the secondary market, OpenSea accepted APE as a form of payment for future listings. Otherdeed NFTs were trading at an average price of $25,629 before the release, but plunged to $15,510 after the release, along with the APE price drop.
Although many Web 3.0 investors hoped this coinage would leave others by the wayside, they did not expect the overall cryptocurrency and NFT markets to head into a downward spiral. In the last seven days, Ethereum has fallen by 15% and since most NFTs are based on Ethereum, their prices have also taken a hit. Solana-based NFTs ((SOL) have also been hit hard, as SOL is down 21% in the last seven days.
NFT traders also expected the minting to boost the NFT market with liquidity. Although liquidity was injected into some collections, the total sales volume of NFTs has fallen by 29% in the last seven days. These figures suggest that the market could be entering a cooling off period.
With much of the market in the red, NFT investors are finding themselves in dire straits. Some investors extended leverage far beyond what they could cover and are having to force sell their assets at a loss to cover margin calls and liquidations. Others are rationalizing the downward slope to retail investors panicking over rate hikes. interest in United States.
The WAGMI “we’re all gonna make it” mantra that became popular with NFT investors is being put to the test and traders are having to deal with market cycles that are not decorated with all-time highs and monumental volume. On the positive side, developers are often born during these breaks. Savvy investors seize on anticipated market declines as moments to “stack and survive“, taking advantage of the current lows to accumulate more assets in the hope of reaching new all-time highs.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.