When the NFT mania took over the cryptocurrency, the Internet was flooded with NFT links, success stories, and of course a lot of hype. Over the past year, the crypto community has witnessed a phenomenal increase in the number of non-fungible tokens. In fact, NFT’s market space grew nearly 300% in 2020, while NFT’s sales grew to $ 2.5 billion in the first half of 2021. Needless to say, this was a huge jump from $ 13.7 million in the first half of 2020.
After the advent of Cryptopunks and the Apes, NFTs became a mainstream trend, and on September 8th, one of the biggest NFT events in history took place, with over 18K + addresses competing to coin 7000 NFTs from a collection called The Sevens.
This contributed to the highest recorded average gas price of over 5,000 Gwei in just 10 minutes. In addition to the increased interest in retail, the influx of institutional investors has also boosted the growth of NFT.
However, how did this affect the market altcoins?
Do NFTs pump altcoins?
High retail and institutional interest has been key to the growth of the cryptocurrency, but NFTs have had their impact on the market. An interesting trend to note here is that while most networks wanted to jump on the NFT bandwagon, only a few were able to take advantage of the true benefits of it.
Notably, low-cap altcoins picked up steam as the NFT fever peaked, but didn’t last long. On the other hand, higher-cap altcoins like MATIC and Litecoin have seen gains driven by prices. In fact, it seemed like the NFTs were playing a major role in leveling certain altos.
For example, the Litecoin Foundation recently announced the launch of OmniLite, a decentralized token creation platform that allows decentralized tokens and smart contracts to be produced alongside cryptoassets such as tokens and NFTs. In response to this, the LTC price held on to the market even when the market collapsed.
In addition, Origin partnered with Polygon to offer basic Tier 2 NFTs, and news of the same contributed to MATIC’s recovery from the swap. In fact, MATIC is up 3% in just 24 hours.
Remarkably, however, this NFT magic wand did not work for all altcoins. In the case of Axie Infinity, for example, a huge amount of old coins were moved around during publication. Now, while this may have been an attempt to raise the price, it has proved in vain. Axie is an NFT based platform, but the price of the alternative seemed to be low even during the NFT boom.
Peak Institutional Interest
At the time of writing, Alibaba’s Tmall has sold moon cake NFTs, while Chinese internet giant Tencent has also raided the NFT world by launching an NFT trading platform called Huanhe.
Despite growing institutional interest, the broader NFT market has seen a pullback recently. In fact, daily volumes fell to about $ 56 million on September 12 – an almost 50% drop in volumes since September 9.
Finally, it is important to note that NFTs are still illiquid. Their value depends on the hype, and as long as that hype stays, NFTs will have solid value.