NFTs are non-fungible tokens that are a relatively new concept and were not known by many until they became ubiquitous recently. The investments made in NFTs jumped by almost $40 billion, from what it was in 2023, to what they became in 2023. This depicts that more and more people are now aware of digital art or tokens and are also spending more on the same.
The NFTs are believed to transform music, different kinds of art and sports as well by offering the creators an opportunity to monetise their art on the internet. It was just last year that the NFT market experienced eye-popping sales and more and more people are considering the same with each passing day.
Just as with Bitcoins or any other cryptocurrency, the price of NFTs also depends on several factors. Some of these include the demand for artwork or the number of people who are after buying a particular piece, scarcity of the artwork, and the price of the underlying cryptocurrency used. To know more about the price regulations of NFTs, visit https://www.okx.com/markets/prices. You should know that numerous marketplaces are into selling NFTs which are powered by any particular blockchain.
Speaking of the current market scenario, the ethereum blockchain powers some of the most popular options available. Having said that, if you are looking to indulge in buying and selling NFTs from any of the famous marketplaces available, you are required to have the native cryptocurrency of Ethereum, known as Ether, to carry out the transactions.
Many are of the notion that the price of bitcoins and NFTs are related and that if the price of one goes up or down, the price of the other is impacted as well. Let us go over a few facts that explain the say in a better way.
The last twelve months were revolutionary for the NFT market and it is believed that people are paying like crazy for simple JPEG files. Well, you should know that it is not only a file but contains a whole lot of emotions and a complete story behind it. Also, the non-fungible tokens will soon be used by people for numerous trading options. That said, people can use their tokens to trade real estate, rights of a music file, debt instruments, etc.
The Correlation Shared Between NFTs and Crypto Market
There is a somewhat strange relationship between NFTs and Bitcoins, or any other crypto. You can consider the relationship is very similar to what is shared between a parent and a child. One year ago, when NFTs were not known by many and when their market was small, the token depended on cryptos for its price action. Now that the market has matured, the relationship between the two is falling apart.
When in January, the bitcoin market had its best impression of the downhill ski slope, NFTs were booming as well. Also, OpenSea, the online trading platform of NFT recorded a whooping sales volume of around $5 billion. This figure was surprisingly the all-time high, as far as NFT trading is concerned. It was then that a few observers started believing the fact that when the price of bitcoins and the rest of the crypto market goes up, the price of NFTs goes down and vice versa.
Additionally, a few other observers found out that both the markets have been syncing with each other. One of the best examples of this situation was when the Ukraine war started, both the markets sank together along with the rest of the market.
Does The Two Share Any Relation In Reality?
NFTs are relatively new in the market, and it has been just a year that the market has skyrocketed with investments. Having said that, the amount of professional research done on the concept is thin. It is because the market was nowhere just a few years ago, and now it has seen a whopping increase in recent years.
If you are active in the NFT market, you will come to know about the strong crossover between the different participants in the market, and the NFt participants. Part of this fact is correct since it is to buy an NFT that an industry player may need to leverage it as a mode of payment, and a level of complexity for many.
Is It An Independent Market?
A report by Coin Metrics was looked at in February, and it depicted the correlation shared between the sales volume of the trading platform, Opensea and the price of Ether. This was done to analyse if the rise in the price of ETH has resulted in the drop in NFT sales, and vice versa. The report concluded that the market of NFT is independent and its major part moves separately from the rest of the industry.
The rest of the crypto market responds differently to the macro factors as compared to the NFTs, and so it will not be justified to say that the NFT market is dependent on cryptos. Though, some patterns and other traces are still seen by a few traders between NFTs and bitcoins or other cryptos. There is a lot of debate in the industry, that when there is a decline in the price of altcoins and bitcoins, the money moves into NFTs.
This is only because the traders are always on the lookout to make profits to the extent possible and chase more gains. Moreover, when the market experiences turmoil they get a chance to trade the fun diversion of JPEGs.
The Bottom Line
The crypto market is like a bubble and it is also big enough to elevate the advantages that the market has to offer. Moreover, when the rest of the crypto industry is floundering, the NFT market has nothing to do with it and it regulates on its own. The tokens are now matured enough to be regulated as an independent industry and it is also moving away from the rest of the crypto industry. That said, you can enjoy the peace of mind that the price of NFTs will not fluctuate when there are ups and downs in the crypto industry.