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NFTs in free fall. Does the bubble burst?
If you have been aware of the world of cryptocurrencies and NFTs, you will have realized that the sector is in decline. For a few months, these have not stopped falling and as much as they try to make the projects survive, they all collapse.
Over the past year, the NFT sector generated more than $44.2 billion. This made it become quite a profitable business and made a lot of people make a good amount of money. However, this 2022, the market has fallen by up to 75%.
Many projects that have been born this year and at the end of last year, have ended up failing, after their price fell. This has also caused many investors to end up losing large amounts of money.
Today we will delve a little deeper into the causes that have caused this market, which looked quite promising, to end up falling. In addition, we will analyze if this is something eventual or if this bubble has burst.
What made NFTs so popular?
Over the past year, NFTs have been very popular and this was mainly because they were “in”. One of the most popular sectors was NFT games, which promised to earn money in a simple way.
All this meant that millions of people from all over the world ended up putting their money into this type of project. Many people went on to win a great deal of money playing these games, while others barely made a return on their investment and others not even that much.
In addition, all the hype that was generated around this helped them prosper and grow. There were even coins that reached a price of hundreds of dollars and then ended up falling by more than 90%.
Whenever an opportunity to win “easy money” appears, it tends to become very popular. And this is what happened with NFTs and everything that revolves around them.
Scams, one of the main causes of the fall
One of the main things that hastened the downfall of gaming and other NFT projects was scams. Despite the fact that there were many solid projects that had a long history, there were also others that were just looking to scam.
The scammers ended up stealing millions of dollars from investors, causing many people to walk away from the projects. Even when the dev team was good and it was a trustworthy project, the precedent for scams had already dampened people's interest.
For its part in the art world NFT is no different, there are many people or companies that issued these assets and ended up being fake or stolen. This means that people who have ended up buying them have thrown their money in the trash.
The main problem with this is that being a market that is not regulated, it lends itself to it.
Without consumer protection, NFTs will never attract investors' attention again
Due to all the scams related to NFTs, people have already turned away from this market. It is not expected to grow, at least in the short term. As long as there is no regulation or something that can protect the investor, it is unlikely that people's confidence will be recovered.
As long as this does not happen, it is very unlikely that NFTs will be able to regain value. However, one of the main characteristics of this market is that it is completely decentralized. That is why regulating it would not be something simple and would lose part of its essence.
So… Is it the end of NFTs or can they be recovered?
As we have already mentioned, the NFT sector is badly beaten and mortally wounded. Despite this, there are still many people who are trading these tokens. The market is likely to remain moribund for a while longer.
Knowing if they will get back to where they were in 2021 is difficult, but this does not mean that they cannot have important growth. Everything will depend on what happens in the coming months.
Also keep in mind that the entire cryptocurrency market is down and this is dragging NFTs down as well.
