In times of the crypto market crash, we all feel concerned. All kinds of panicky thoughts surface in the media and blogs. It’s scary. Especially for the new investors in the field.
We’ve been through crypto winter and survived many similar downturns. So today, we would like to share some hope and insight with you.
Do NFTs and coins crash together?
Yes and no. While the NFT prices correlate with crypto prices, it’s not a mirroring situation.
While the NFT prices might take a plunge following the crypto market, it doesn’t mean that trade volume or liquidity will suffer.
Utility is king
A great way to predict NFT’s resistance to adverse market forces is to consider its utility.
As long as an NFT has utility, it has strong support for its stability in the long run.
The best guarantee of NFT’s long-term price and volume is a supportive community of people engaging with it or a stable complex ecosystem.
For coins, it’s a bit different. Some coins can plummet to zero price as well as lose all the volume, even if thousands of people traded them a few weeks ago.
How to Asses NFTs Utility?
It might be challenging to gauge utility for art NFTs since it lies in the realm of aesthetics, reputation, and fashion.
However, for other types of NFTs, it’s relatively easy. Here are a few factors to consider:
Community — the size and the overall activity of the community benefiting and using said NFTs is the best predictor of their long-term success.
History — NFTs with long histories of utility will be much more stable than fresh new projects that base most of their volume on hype.
Platform — a platform that provides NFTs with their utility can give a great insight into the viability of the tokens in the long term. If NFTs allow users to access complex functions and derive additional value, it’s a very good sign for long-term success.
Partnering platforms — if NFTs can be used across platforms and users can get additional utility outside the home platform, it’s another indicator of long-term stability.
Uses — if an NFT provides a wide variety of potential utility sources, it is likely to hold its value in the long run.
Overall, high-utility NFTs can become a safe haven for investing in a time of crisis.
We hope this helps you navigate the world of NFTs in these crazy times.