Why have NFTs recently outperformed bitcoins and digital currencies? Experts answer

Despite the fall in the price of digital currencies in recent weeks, the NFT market is still growing strongly. It seems that in addition to the emergence of this technology and the desire of people to experience them, psychological factors have also influenced the spread of NFTs.

To Report The Block, the market for unique tokens, or NFTs, kicked off the new year. NFTs were not even affected by the wider financial market crash, which affected many markets, such as the US stock market and digital currencies.

Digital currencies such as Bitcoin, which play the role of market leaders, have fallen by several tens of percent since the beginning of 2022. The decline is due to the same big fears that pushed up the US stock market majority in January. Despite concerns about rising US bank interest rates and their impact on the digital asset market, NFTs, a marketplace that sells a collection of digital collections and artwork, got off to a good start in 2022.

Thomas Bialek, author of The Block website, wrote about the phenomenon:

Looking at the performance of the price floor of the most popular NFT collections in the last three months, it can be seen that there is a significant difference between the price of these well-known NFTs, the price of Atrium and the price of Bitcoin.

Also read: What is a Non-fungible token or NFT?

On the other hand, during this period, the price floor between the different NFTs was different from each other, while the digital currencies themselves have entered an upward trend in the last 24 hours.

The divergence between the two markets indicates the degree of dynamism of the digital currency ecosystem. This dynamism means that certain segments of the market can be expected to rise at the same time, while the rest of the market is in recession; But what exactly saved the NFTs from crashing?

Sam Bankman-Fried, co-founder of FTX Exchange, said he was certainly surprised by the NFTs’ resilience to market collapse since the beginning of the year. Many of these events are related to psychological factors, he says.

“NFTs are easy for a trader to buy and sell,” he said.

The fact that these tokens are “unparalleled” makes them less liquid.

According to Bankman Farid, the general nature of NFTs makes them more difficult to sell than tokens that individuals hold in an exchange such as Kevin Bass.

The FTX CEO continued:

I’m a little surprised by the recent growth of NFTs. The fact that anyone can tell you own an NFT makes it harder to sell; Because it is more difficult to give up an asset in front of the public eye than to make changes to the portfolio that only you can see.

In addition, it is better to think of NFTs as a luxury item that is purchased for display.

In addition, according to Arthur Cheong, founder and CEO of DeFiance Capital, people are less likely to sell their NFTs at a loss than assets such as regular, more liquid tokens. “The psychological dimension of this issue is also very interesting,” he concluded.