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The non-fungible token (NFT) market is finally reacting to the U.S. Securities and Exchange Commission’s (SEC) stepped-up attacks against the cryptocurrency industry. News of the Commission’s attempt to freeze the assets of Binance’s U.S., and that U.S. dollar withdrawals are pausing have traders liquidating NFTs or sitting on the sidelines.
Either way, it’s pretty clear we’re entering another new phase of the NFT market, and traders are being cautious. How low we can go, nobody knows.
When FTX collapsed, the Forkast 500 NFT Index reflected over a 33% loss in value. Today’s market, while showing signs that capitulation is coming, is slowly bleeding out and down nearly 10% in the past seven days. The Forkast 500 NFT Index hit an all-time low yesterday, bottoming out at 2962.
Navigating this market leads me to more questions than answers, and they come to me endlessly throughout the day. I wonder if we have found a floor for NFTs and if today’s active traders are closer to collectors than they are speculators. Can they hold the line until the next wave of innovation that’s set to arrive as blockchain-backed gaming? Will there be more FUD delivered by the SEC, and does the U.S. even have that much impact on markets anymore as builders are driven overseas? Stay tuned for more insight into these questions.
Noteworthy Happenings
There’s no shortage of major developments taking place across the NFT landscape. Bitcoin ordinals are getting a major upgrade with Inscriptions 2.0. With this latest Bitcoin Ordinals update, inscriptions can now reference another inscription which essentially removed the 4MB size limit.
So what can be preserved on-chain now? Video games, generative art, applications, and new tokens that haven’t even been dreamed of yet.
We’ll see what happens when builders get their hands on the new tech, but this advancement shows that we have just been scratching the surface of what the Bitcoin ecosystem will one day look like.
The market is reacting to a new environment of intense SEC scrutiny. On Saturday, a Twitter account named NFTstatistics pointed out that over 93% of all ETH volume on Blur was sellers accepting bids. This means that there were very few sales, and instead was likely points farming, or accepting offers under the floor price in an attempt to get liquidity.
The Polygon blockchain is unveiling an upgrade to its ecosystem called Polygon 2.0. Details will be revealed over the next few weeks, but there’s exciting talk about some drastic changes, including new utility for the network’s native cryptocurrency Matic, changes to governance, and even to the protocol’s architecture. Polygon 2.0 is aiming to build a value layer through infinite scalability and unified liquidity.