The NFT market has undergone a tumultuous journey since its inception globally, with highs and lows. This left many start-ups forming this ecosystem's vortex and struggling to keep their heads above water.
In early 2021, things took a turn for the better as interest in NFTs skyrocketed and collectors began paying huge sums for digital assets. It seemed like the market was finally taking off when the bear market conditions in the crypto world hit hard, leaving many companies scrambling to stay afloat.
However, the good news is that the overall market value began to climb again in the second half of 2022. By the end of July, the crypto market value had topped $300 billion and had continued to increase throughout the year.
With the lockdown in effect in 2020, people worldwide turned to cryptocurrency as a safe way to store their money or to grow it. Most chose to invest in stablecoins pegged to the US dollar, but its eventual collapse resulted in the loss of thousands of dollars.
The crypto market had experienced a significant decline by mid-2022, with the overall market value dropping from over $3 trillion to less than $1 trillion in just six months.
Changing Dynamics
The crypto boom initially attracted many new investors, including those interested in day trading and decentralised finance (DeFi). Non-fungible tokens (NFTs) gained popularity during the boom, with some selling for exorbitant amounts, but the NFT bubble appeared to have burst by the beginning of 2022.
The crypto crisis has not caused serious problems in the wider financial markets or the global economy. Consequently, the crypto market is not to be written off since it bounced back by the end of 2022.
In lieu of the downfall of the crypto market, regulatory concerns have arisen regarding stablecoins, as their failure could pose risks to the broader financial system. Regulators around the world are taking steps to tighten regulations on the crypto market and protect consumers from scams and risks.
The future of the crypto market remains uncertain, with both proponents and sceptics expressing differing opinions on its recovery. Stablecoins play a crucial role in the crypto ecosystem, and their collapse can have far-reaching effects.
Evolving With Times
Evolving from this drop, many small businesses found themselves in dire straits, with layoffs, office closures, and even complete shutdowns becoming a reality. It is heart-wrenching to see these innovative companies facing such challenges.
However, it is also inspiring to see how some have been able to adapt and pivot their business models to survive.
● Devin Finzer, CEO of OpenSea, took to Twitter to announce that the company would be reducing its headcount by 20 percent.
● Other big players in the crypto industry, such as Crypto.com, Blockfi, Coinbase, and Gemini, have also been forced to carry out mass layoffs in recent months.
Beacon Of Hope
It's a tough time for everyone in the NFT space, but there are glimmers of optimism.
Some start-ups have been able to shift their focus to more practical applications of NFTs, such as gaming or virtual real estate. Others have diversified their offerings to include other blockchain-based products and services. It's impressive to see how these companies have been able to weather the storm and come out stronger on the other side.
Several famous NFT firms in India have successfully handled the present market challenges. For example, Polygon Studios is Polygon's gaming and NFT division (previously Matic Network), a well-known Indian blockchain platform. The firm was able to use its existing infrastructure to create NFT-based gaming experiences that were favourably appreciated by the market.
Another enterprise, bitsCrunch, backed by Animoca Brands has launched the leading NFT analytics dashboard 'Unleash NFTs' and has just joined with Cointelegraph to become the standard NFT analytics engine for all industry platforms. The firm creates crypto data forensics to assist retail, institutional, and venture investors in making more informed decisions about crypto assets. These companies are paving the way for others to follow in their footsteps.
Venture capital firms have always been interested in the potential of the NFT space for growth and innovation. While some may have become more cautious in the wake of the recent market correction, plenty of VCs are willing to bet on the industry's long-term prospects.
Animoca Brands, a software gaming business and venture capital firm that specializes in building NFT-based intellectual property rights for gamers and growing the open metaverse via gaming, is one of the greatest examples. It was successful in getting significant investments from renowned investors such as GGV Capital, Boyu Capital, Temasek Holdings, and others in September 2022. The funds raised will be used for acquisitions, investments, and expanding public awareness of the metaverse.
The NFT market may have experienced some challenges in recent months, but there are still plenty of opportunities for innovative startups to succeed. By pivoting their business models, diversifying their offerings, and staying focused on the long-term potential of the market, NFT startups can continue to thrive even in turbulent times. Let's support these companies and their vision for the future, as they are the driving force behind the evolution of the NFT space.
- Ajay Prashanth, Head, Ecosystem Growth at bitsCrunch
