January 22, 2022

Greetings

I woke up this morning to another major drop in crypto currency prices. Across the board my portfolio dropped an average of 20%+.

For some this is a great opportunity to buy into the crypto market or even buy more and lower their averages.. For others.. It's a devastating blow to their investments because they have been pouring so much into it and have built such a large retirement portfolio that they can't begin to recoup the majority of the losses they are looking at right now by averaging down. 

I've been pondering for some time if I should write this blog or not. I'm sure that many will disagree with my take on the situation but the truth is numbers don't lie. 

On April 3, 2021 Bitcoin reached a all time high of 63,729 and then later on June 5th the price nose-dived after a tweet by Elon Musk Showing a broken heart by the word Bitcoin. (cause and effect)

But while all this was going on, another major factor was coming into play. Something new, Something never seen before on the market and something that we really have no idea what the overall effect on the market might be.  NFTs

Though NFTs have been around since 2014, 2021 was the first year that this novel technology broke through into the mainstream, disrupting the art world and industries beyond it. Over the course of the past 12 months, the NFT scene has evolved rapidly

In 2020 the NFT market had approx 94.9 million dollars in sales. That is the equivalent of 2575 bitcoin being cashed out at $40,000 a Coin.

In 2021,  Google says there was approximately 21.9 Billion dollars in NFT sales. That is the equivalent of 547,500 Bitcoin at $40,000 per Coin being cashed out of the crypto market.  

Can we see a problem yet?

According to data collected by NonFungible.com, NFT sales can currently range anywhere from 15,000 to 50,000 per week. Before a big boom in the latter part of 2017, there were merely 100 sales per week. So, this new number alone shows how much the NFT market has grown in just a couple of years.

After the tweet by Elon Musk the market has tried to rally several times but it has continued to trend downward and seems to be actually picking up speed as it bleeds out. 

Is the loss of 22 Billion from the crypto economy a good thing? I think not.

And what of NFTs. Will they hold their value as the market dips from the loss of liquidity? Highly doubtful.. In fact it is the writers opinion that this is a terrible fad with long reaching affects. 

Beanie Baby's were a fad. Funko Pop, Pokémon Cards, Pez dispenser I could go on. Most of these high priced fad items are now almost worthless compared to the money spent. Only a few of them held any value over time..

What about Art NFTs. Almost no one from this generation knows who Norman Rockwell is.. Do you think NFT art from some unknown artist who is a temporary fad will stand the test of time?

Companies like Pizza Hut and Burger King are now talking about getting into the NFT game. They have no blockchain or their own crypto but are able to create NFTs and sell them and cash in on the market. Leaving us again with a shrinking % in our portfolio. 

By the end of this year we could see NFTs created by tens of thousands even hundreds of thousands of different companies and in the end I doubt many of them will hold a value of more than 25c, I mean, look at all the huge baseball, football and basketball card collections. Most of those cards won't even sell.. No one wants them..

At least with Stamp collections the stamp is still worth the stamped price long as it isn't canceled but again, most people don't want them and don't collect them either.

In fact. It is my opinion that the only safe NFT to buy is one backed by a crypto currency and Guaranteed to hold a certain price.

Like Enjin NFTs .

They, like stamps, are Guaranteed to hold a value and you can know that value before you purchase.

The rest? Well let's hope you get lucky. 

(This is merely my opinion and not financial advice)

God bless.