Smart people keep innovating, for collectors and investors alike

NFT market shows normal signs of maturing. Wow this is fast.

Precis

Not surprisingly, artists and collectors are learning how to communicate with their audiences with more success. The investment landscape is maturing as well. This is a real market, not a fad.

Safe Harbour

His research is intended for the sophisticated investor to assess market developments and company performance and make insights. His comments are in no way intended as a solicitation to trade in any securities. All comments are subject to Risks and Uncertainties outside of the control of the author.

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The new NFT Index allows investors to participate in a basket of value

Figure 1: Introducing the NFTX — an index fund that is a proxy for NFTs.

Source: Coinmarketcap.

An index gives us a different risk profile while supporting the ecosystem

So the investor — note, not the collector nor traditional use case — is comfortable with a valuation around US$200.00 in current market conditions, and trading volumes are representing a more consistent pattern. This sets the table for a breakout on news or renewed excitement, as vehicles like indices gain popularity. Furthermore, it is impressive how quickly the market invented and adopted such a tool as an index so quickly after interest expanded in 2021. This speed of investor innovation demonstrates the readiness of these new digital asset classes to respond to market demand.

Without getting into the components of the index, which can spark a unique debate about validity, I invite the reader to visit: https://coinmarketcap.com/currencies/nftx/ to explore this index’s components.

Active users for March show continued strength, albeit less than the parabolic growth in February.

I will add to that last point by offering that the advent of a significant private fundraise such as the Dapper Labs announcement is foundational for the support of the NFT medium. Not only does this involve kudos to the roots of the ecosystem in its original and most popular forms, and to the skilled pioneers at Dapper, but this also involves a reputational commitment from superstar celebrity athletes who are personally investing in the fabric of this market.

Figure 2: New Users stays strong — and are mostly driven by Top Shot

Source: The Block.

Innovation Keeps Coming as brilliant minds look at use cases

The Gaming world takes longer because of the level of detail and programming, but metaverses like the Sandbox are coming to life very quickly. The in-game channel for exchange of digital assets will continue advancing interoperability with other ecosystems. Digital Wallets for storage and control of digital assets will become ubiquitous and once they are, all of these adoptions most certainly should move into a hypergrowth phase.

Summary

I will not be surprised throughout the rest of the year when applications for NFTs continue to arrive that highlight use cases we haven’t begun to think about yet, in terms of cultural progress, investment opportunity, and utility cases.

© 2021 Thomas Kennedy. All rights reserved. See Disclosure Statement

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