By all accounts, crypto is at a crossroads. Across markets, the legal and regulatory landscape, and the Web3 startup ecosystem, there’s little disagreement among industry leaders that 2024 could shape up to be one of crypto’s most consequential years yet. Whether those events will finally lift the industry out of winter to new highs, or imperil it, remains another question.
But do not panic, dear reader. While nothing about the future can ever be certain—least of all when it comes to crypto—Decrypt has spoken to analysts across finance, policy, and the NFT space to peek behind the curtain.
After exploring the impact of a spot Bitcoin ETF, how Bitcoin and TradFi will finally merge, and when we'll get regulatory clarity in the United States, here's a look at whether NFTs are poised to rebound in 2024.
Amid the enduring crypto bear market, few asset categories have fared worse than NFTs. Even recent, modest gains for NFT trading volume still have the industry down a whopping 93% since the frenzied highs of early 2022.
A sign of the extent of the slump: Even the term NFT itself has become a dirty word in most circles. If crypto markets do eventually rebound, will NFTs be in a position to come along for the ride?
Pedro Herrera, DappRadar’s head of research, is confident that NFTs will enjoy a major resurgence in 2024. But he isn’t talking about the profile picture (PFP) market.
“Collectibles that we were so used to in 2021, like Bored Apes and CryptoPunks, have slowed down,” Herrera told Decrypt. “People are starting to grasp the real concept behind NFTs, which is proving ownership, authenticity, and so on.”
Herrera believes that the technology underlying NFTs has finally matured to the point where it can start realizing its full potential—one that reaches far beyond facilitating the swapping of cartoon animal JPEGs.
He points to developments in sectors like tokenizing real-world assets (“Imagine your mortgage as an NFT!”), gaming, and the metaverse—which experienced its own hype crash last year, but Herrera expects to rebound in full force with the proliferation of high quality AR and VR hardware like the incoming Apple Vision Pro.
“We're starting to see a lot of use cases applied beyond simple collectibles,” Herrera said. “I think that trend will continue strongly in 2024.”
That doesn’t mean all PFPs are dead, the analyst wants to make clear. A handful of blue chip NFT collections like Pudgy Penguins, Bored Ape Yacht Club, and CryptoPunks have managed—either through first-mover advantage or clever tactics—to evolve past collectibles into strong IP brands with value in both the digital and physical realms.
That handful of collections should now be able to grow and develop with the NFT industry as it matures, Herrera believes. But as the NFT industry comes out of crypto winter and progresses to its next stage, the vast majority of NFT collectibles out there will likely miss the boat.
“Sadly, 90 to 95% of the collections that we saw during the NFT bull run won't come back,” he said.
Edited by Andrew Hayward