Are people now realizing that auto-generated pictures of monkeys and pencil drawings aren't worth that much?

According to Bloomberg, the NFT market is beginning to drop. And according to the NFT tracker NonFungible, the average trading value of nonfungible tokens has dropped drastically recently, falling from a high of almost $7000 at the start of the year to roughly $2,000 now.

Is the NFT bubble popping? There is some indication that the excitement is beginning to fade — but the reality is more complicated than that, with the number of unique traders joining NFTs increasing.

Additionally, as recent history has demonstrated, the crypto universe is full of surprises.

What is the situation of the NFT market at the moment now?

We may assume that the landscape has shifted significantly between March 2021 and 2022. Let's take a look at some of the factors that have radically changed the face of the business in just one year:

Let's take a look at some of the factors that have radically changed the face of the business in just one year:

• Excessive speculation has slowed trade and increased loss resale.

• The public is losing interest in this digital asset class, whose value proposition of 80% of NFTs in circulation leaves something desired.

• We noticed an apparent saturation of the NFTs markets: the amount of NFTs in circulation expanded by 126 %, from 14.2 million in February 2021 to 32.1 million a year later, according to  NonFungible.com.

• The Ukrainian war has created a complicated geopolitical background that naturally gets all the attention, leaving less opportunity for coverage of NFTs sales.

• Also, the NFT of Jack Dorsey's first Tweet is being resold on OpenSea by the Crypto entrepreneur Sina Estavi, which he bought for $2.9 million last year, and the top bid is less than $7,000. Along with millions of other NFTs. Without a specific setting, lost in the noise, yet contaminated by the air of a marketplace that has failed to regulate suspicious behaviors.

In other words, the NFTs markets have poorly suffered from excessive speculation, the markets have been saturated with low-value assets, and the general public is beginning to mistrust the genuine value that NFTs can deliver, with more eyes on the Russian-Ukrainian war than on trading NFTs.

There will be no more Big sales at $69 million in the landscape to convince purchasers that any NFT can flip for tens of millions of dollars.

Where Are We Going in 2022 and Beyond?

In contrast to the somewhat uncertain growth between 2018 and 2020, 2021 showed market stability and a more steady level of growth within the market. 

It is possible to presume that the markets have progressed beyond the "Gold Rush" growth stage.

This does not indicate that the markets have stabilized. It is realistic to predict that there will continue to be ups and downs as the relatively new business works out remaining gaps and regulations.

We may expect them to be less dramatic than in the past.

Growing global government effort to control markets creates plenty of unanswered questions. 

New industry regulations and legislation are more likely to result in more measured sales and purchases. Such changes may slow the market, but maybe they will ultimately provide more credibility and security.

Implementing regulations and fail-safes will reduce the potential for less ethical individuals to attempt fraud using blockchain technology and ideally establish a fallback if such situations occur.

The Evolution of NFTs

Given that NFTs are generally a male-dominated market, it is great to see a wider variety of artists, entrepreneurs, and developers enter the industry. It is critical to see oneself represented in the industry to stimulate innovation and success in any field. Instead of being a purely technological business, the public face of NFTs is focused on social and environmental development.

Previous practices that made NFTs environmentally unfriendly have now come to light. NFTs have a high carbon footprint because they used procedures that produced much carbon but did nothing to offset it.

Recently, carbon-neutral solutions have been created to ensure that NFTs are more environmentally conscious.

With a new intention to create environmentally friendly NFTs, the future of NFTs looks bright.

The NFT Bubble popped!

Late in 2021, the NFT boom was in full swing. Unless you have been avoiding the news, social media, and maybe the internet, many people would have come across these three strange letters in 2021 since it was the word of the year.

The NFT industry, which was hardly a prominent subject between the end of 2021 and the beginning of 2022, has exploded to a valuation of $22 billion, a rise of more than 22,000 % between December 2020 and December 2021. NFT markets like OpenSea, Foundation, super rare, and others have increased volume as celebrities, inventors, and people worldwide compete to mint the newest JPEG or PNG file into the blockchain.

When you search for the #NFT hashtag on social media, hundreds of posts appear every hour, the majority of which fall into one of three categories:

• Informing customers about sales (private and public)

• Requesting that users sign up for whitelists and airdrops.

• Notifying the public about giveaways.

New projects are constantly minting 10,000 NFTs – with no unique pictures associated with the token. The NFT is distinct in that it frequently has a creature or object styled in 10,000 various designs, colors, or backgrounds.

However, people continue to tweet, retweet, sign up for, and purchase NFTs from all backgrounds, furthering the story that NFTs have some worth.

And this is the bubble.

What Makes NFTs Valuable?

NFTs are data representations on the blockchain. As a result, it is critical to comprehend what, if anything, this data represents. Binance has published an excellent piece outlining a broad methodology for determining the worth of an NFT.

The company says that the three most important variables to examine when determining the objective value of an NFT are rarity, utility, and tangibility.

• Rarity

The rarity of anything in the world is frequently used to define its value. Unfortunately, many NFT projects have used this concept to convince customers that the idea of "unique" applies to every NFT they issue. While theoretically true, its rarity is far from comparable to a wild panda. Instead, the rare definition excludes the general public's level of interest in the issue. Wild pandas are valued now because the world, for the most part, enjoys how nice they are, and they are highly marketable to the zoos and governments that help keep them safe. In addition, the vast majority of NFT work produced today has little to no ideology put behind it.

• Utility

The utility of an object is determined by how useful it is in the real world or the digital world.

NFTs can give functionality in the NFT universe by unlocking different in-game features or accessing content (e.g., holders of an NFT may have access to online content that is not available for non-holders).

NFTs can give functionality in the NFT universe by unlocking different in-game features or accessing content (e.g., holders of an NFT may have access to online content that is not available for non-holders).

Moreover, like with other NFTs designed primarily to generate profits, many claims to be helpful. However, a detailed examination will reveal that many projects are doing things in the wrong order by releasing the NFT first and then determining what it may be used for afterward.

• Tangibility

NFTs are unique and may represent anything in the physical or digital world. In this manner, NFT issuers can link the digital asset to a real-world or digital item.

Many NFTs released now do not have this link. These assets rely on their uniqueness to attract the attention of their intended audience. In general, holding the NFT does not imply rights to anything else.

On a final note, A slowdown or pullback in all actual economies will undoubtedly impact digital economies, with those digital assets with unstable foundations bearing the bulk of the impact. It may be a good moment for individuals who only buy NFTs to assess their portfolios.

Indeed, there is a potential argument that rising inflation may cause individuals to invest money into Bitcoin. Nonetheless, history has not yet demonstrated that this is happening, and we will have to wait and watch if this deflationary asset triumphs in a real-world economic collapse.