The lower liquidity and unpredictable prices are partly the result of limited supply, which puts some collections under the sway of whales, or large holders. In the case of CryptoPunks, the 100 biggest owners currently own nearly half of all pieces.
One solution to the liquidity woes has been to fractionalize NFTs into fungible tokens that represent a share of a beloved collectible. That ease of trading can open up icons like the Doge meme to the masses, the pitch goes, but it’s also fueled the intense market euphoria: When the art collective that bought that image for $4 million publicly auctioned it in 17 billion virtual chunks this month, its total value surged to as high as $705 million.
“Ninety-nine percent is about being in the right circle, having the right information at the right time,” said Zuppinger. “In the NFT space, you live with this constant frustration that you have missed a chance to make $1 billion.”
He would know. Back when CryptoPunks could be bought for literally nothing in 2017, Zuppinger saw them as an experiment with little aesthetic value. Just last weekend, one token was sold for a cool $7 million.
This article was provided by Bloomberg News.