NFTs, a punchline during cryptocurrency bust, attempt an unlikely comeback

financialpost.com:

Non-fungible tokens — which went from being touted as the cutting edge of the digital frontier to the punchline for the most recent cryptocurrency bust — are suddenly staging an unlikely comeback.

No corner of the market experienced more pain than NFTs when the cryptocurrency bubble popped after a series of scandals in 2022. Global sales volume for NFTs plummeted 63 per cent to US$8.7 billion last year, with many assets becoming nearly worthless, according to data from CryptoSlam Inc.

Those who spent fortunes on buying the hottest tokens were mocked as suckers and some investors even sued celebrity NFT promoters over claims that they’d been duped. Now, after bitcoin has staged a ferocious rebound amid the rollout of exchange-traded funds pegged to the digital currency, the NFT industry is searching for ways to turn the page and reignite excitement in its corner of the digital universe.

Startups are resurrecting narratives about NFTs being used in gaming, finance and art, claiming they’ve learned hard lessons from the past that will make their latest attempt more endurable. They want the tokens to be seen as more than just expensive profile pictures limited to the rich and famous, but the digital assets aren’t on solid ground just yet.

NFT sales almost tripled to US$918 million in November from the month before and then surpassed US$1.7 billion in December, according to CryptoSlam. However, volumes dropped 33 per cent in January to US$1.2 billion, indicating that an NFT recovery could be complicated.

Skepticism about blockchain gaming, uncharted territory around financialized NFTs and questions about whether NFT art can recapture sky-high sales all pose challenges for the embattled market.

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