As co-founder of a website tracking the spectrum of digital collectibles, Gauthier Zuppinger has seen it all. Drawings of toads, apes, abstract blobs, octopuses on heads, fire-breathing devils, and more.
Since last month, as non-fungible tokens supplanted meme stocks and minor coins in speculative imaginations, his website has added 169 collections -- more than the prior 12 months combined. For anyone convinced they possess an investing edge to become the industry’s Warren Buffett, the chief operating officer of Nonfungible.com has a word of warning.
“Maybe 90% of collections minted today are totally useless and meaningless,” Zuppinger said from Paris.
Last week’s $24 million Sotheby’s auction of ape tokens, the $180 million Doge meme and other surreal superlatives from the summer of NFTs have all painted a pixelated picture of easy money. But the market is in fact a vast sprawl of varying investing outcomes, data compiled by Bloomberg show.
“It’s just really a tiny piece of the community and some extremely lucky or well-informed people,” Zuppinger, an early enthusiast of virtual worlds, said in reference to the market success stories.
One of the most prevalent investing outcomes: Getting stuck with something nobody else wants. In the 90 days through Monday, roughly 1.9 million assets were sold on the largest marketplace OpenSea. But about three quarters never saw another transaction.
For those that do find buyers, the market is dominated by high-profile, high-value works. The most actively traded 3% of collections accounted for 97% of all dollar volume.
The market’s more liquid corners have managed to ride the bullish wave, though even then the returns have been far from even. Among those with at least 100 transactions, 42% saw their average dollar price drop, while 39% doubled in value or more.
The data collected from OpenSea’s public application programming interface omitted some collections such as CryptoPunks and ZED RUN.
Now with volumes slipping from peaks after Bitcoin plummeted last week, the question is whether this speculative boom will go the way of many others: Latecomers holding the bag as the self-reinforcing mania reverses.