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Non-fungible tokens, aka NFTs, have been widely talked about across pretty much every industry. Sentiment toward the digital asset varies depending on which side of the street you’re talking to – enthusiasts who love it tout it, but the skeptics who remain unconvinced heed and encourage caution.
However, recent reports have suggested that the NFT bubble is shrinking, with sales decreasing in March of this year. According to market tracker CryptoSlam, around 635,000 people bought an NFT for an average price of US$427, which is down from about 948,000 for US$659 in January.
But for Anson Kwok, the founder of the newly launched Red Hare NFT Index (“RHNI”), the market is merely evolving.
“NFTs usage is now going beyond art, bragging rights or access to some social club,” Kwok explained. “It’s venturing out into industries such as healthcare, law, real estate and more. And so, with this expansion, naturally fluctuations will arise with changing interest in the market.”
This sentiment is echoed by Modesta Masoit, the director of finance and analytics at NFT research firm DappRadar, who explained that the market wasn’t in decline but is instead going through a consolidation stage after seeing massive growth. Masoit also added that geopolitical tensions and economic uncertainty in the backdrop may have contributed to the sales decrease.
But for Kwok, whose feet have been firmly planted in the NFT world before it became a buzzword and FOMO-driven digital asset that retail investors poured their COVID checks into, he noticed that there wasn’t a standardized metric to track the trend or trading activities of the top NFT projects and their prices. He realized that the absence of this just made it more difficult for everyday investors to participate in NFT transactions.
“I have seen the NFT market thriving,” explained Kwok. “Many people nowadays know about NFTs, but most high-quality NFT projects on the market are already very expensive. Because one of the characteristics of NFTs is that it’s indivisible, this sets high boundaries for people to enter this new market.
“But while most people just focus on a single NFT project, but there is no significant benchmark to reflect the whole NFT market. So Red Hare aims to lower those barriers by providing all investors an accurate benchmark of the overall performance of the NFT market.”
The Red Hare NFT Index consists of the top 50 largest NFT collections, including CryptoPunks, BAYC, Meebits, MAYC, Clone-X and Sandbox, in USDT value for NFTs. With varied exposure and monthly rebalance, RHNI presents a rule-based methodology aiming to optimize liquidity, evaluate price changes and become a valuable tool for all investors for price discovery.
Last year the NFT cap surpassed US$17 billion, and as of last month, the total volume traded in NFTs has exceeded US$54 billion. This trend is also expected to increase, with investment bank Jefferies forecasting the NFT market capitalization to exceed US$35 billion this year and US$80 billion in 2025.
“The NFT index provided by Red Hare will become a benchmark, just like the Hang Seng Index in Hong Kong, which will help all institutions to establish NFT-related investment products, making it easier for everyone to enter and partake in the NFT market.”
This was brought to you in partnership with Red Hare Analytics.