Comparing NFTs to Cryptocurrencies: Is the Risk Worth the Reward?
The world of non-fungible tokens (NFTs) has been booming in recent years, with many investors flocking to collect digital art and unique assets. However, recent data shows that the performance of some of the most popular NFT collections, or “blue chips,” may not be as stable as once believed.
According to a recent tweet by NFT God, some of the most well-known NFT collections have experienced significant price drops from their all-time highs. Bored Ape Yacht Club (BAYC), for instance, is currently trading at $103,000 after reaching a peak above $460,000, representing a 77% decline from its all-time high. Similarly, the price of Cryptopunks has fallen 75% from an average price of around $400,000 to just above $100,000.
Every blue chip’s ATH compared to their current price:
BAYC $468k/ $103k
MAYC $112k/ $21k
CloneX $85k/ $5k
Doodles $65k/ $5k
Moonbirds $94k/ $5k
Cryptopunks $399k/ $101k
There’s no such thing as a ‘blue chip’
Take profits as often as humanly possible
— NFT God (@NFT_GOD) March 26, 2023
Other NFT collections like Moonbirds and CloneX have suffered even worse, dropping 94.6% and 94.1%, respectively, from their all-time highs. This is especially noteworthy considering that many of these collections also saw sales much higher than their average prices, which would result in even higher percentage losses if those sales were used for comparison.
NFT God’s tweet goes on to provide some valuable lessons for investors in the NFT market. One of the most important takeaways is that there’s no such thing as a “blue chip” NFT, meaning that even the most popular collections can experience significant price drops. Additionally, investors should take profits as often as possible and not solely focus on the value of their NFTs in terms of Ethereum.
Furthermore, until individuals can pay their rent in ETH, USD value should be the only metric that counts. While many people may be confident that these collections will return to their all-time highs, this is not a certainty, and investors should be cautious not to gamble what they cannot afford to lose.
When compared to the top cryptocurrencies in the market, such as Bitcoin and Ethereum, these NFT collections have actually performed much worse price-wise. Bitcoin’s current price is 59.51% lower than its all-time high, while Ethereum has experienced a 64.19% decline. Additionally, cryptocurrencies are generally much more liquid than NFTs, which leads to much higher trading volume.
Overall, the recent data surrounding the performance of some of the most popular NFT collections serves as a warning to investors in this market. While NFTs may be a valuable asset class, it’s important to approach them with caution and not to assume that they are immune to price volatility.
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