Why an NFT Bear Market was Necessary, and Inevitable
by Justin Perri
It was not a good week for anyone who is heavily invested in any market; but when the greater economic outlook on Wall Street takes a hit, crypto gets hit harder. In the recent past, it has rebounded from bear markets faster too, for the record. Regardless, when you’re helping to build or buying into a budding, volatile industry that has the potential to see a 20 percent drop in just a week, you need to be able to zoom out.
Growth occurs in every part of the cycle — that goes for an NFT bear market too. ‘Up only’ is actually bad for what web3 is attempting to implement into the future of humanity’s digital existence.
Positives in an NFT Bear Market?
If anything, collectors in the NFT space can be excited for an extended downturn for a few reasons; first, it will shake out those looking to siphon liquidity from the NFT economy, leaving the truly dedicated teams in place, and relieve the pressure on creators that comes with the expectation of substantial economic gains.
If there’s one thing you probably should know when entering the NFT space, it’s do not click the links. Just don’t do it. Why? Because the extraordinarily high market value of these digital assets that can be stolen quite easily have become obvious targets for bad actors.
The rampant scams illustrate a larger point: The number of individuals, groups or entire structured organizations that are willing to scam you or maliciously rug a project can seem as though they outnumber those here for the right reasons.
With prices, volume and sentiment in the dumps, those who intend to separate fools from their money will have less prey to feast on. This crypto market pullback should, at least hopefully, usher in a period of reduced rugging and scamming if we do truly see an extended bear market.
What will be left are the people who deeply care about the communities, builders, and ethos of the space.
Market Outlook: Zoom Out
Ethereum is hovering around $2,050 at the time of posting, and that’s not that terrible, considering we saw $1,700 in July 2021, and all-time highs after. The circumstances are certainly different now, with the Dow and S&P 500 falling day after day, and one of the largest stablecoins — $UST — losing its $1 peg as Terra goes to $0.
That said, this reaction of constant doom and gloom in the market may not be as warranted as Twitter might make it seem.
This is not some 2018 type crash, where after going from $10 to over $1,000 in a year, ETH fell below $300 in September of 2018 and didn’t rise above that number again until late 2020. We are more than six times above that $300 number, as much more institutional money has entered the space now.
So sure, let those who would be scared off by this run. Those who can zoom out and see the future of what they’re building and how it is going to impact the future of digital transactions will stay. Finally, maybe, we can weed out those who are truly here to build from those here to take.
Consider the Long-Term View for NFTs
A final silver lining that deserves some discussion is that expectations change when the prices are falling and morale is low. Some might see it as a bad thing, but, again, if you’re departing NFTs now, you probably weren’t making it long term anyway.
The lack of expectations for line to go up can take pressure off of those here to create authentically. Artists will hear less concerns over the floor price when nothings going up. Developers can build protocols, platforms and games in peace.
The reduction of a money-focused mentality will also make the introduction of web3 to the general population less tumultuous. A large coalition of people do not like crypto because they think it’s all about money. Well, if everything is worthless, then maybe we can implement the next generation of the internet without as much resistance.
At the same time, there will be no distinctly better opportunities than others for investors due to hype cycle pumping and dumping, and people can invest in teams that are still building through the potentially prolonged downturn without sacrificing potential profits.
I believe that this will all relieve the pressure a bit and let the talented minds that have flocked to crypto build in peace. We need that, because eventually the next huge rush will come and those that stuck it out will be even better prepared than the last time.