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NFT bubble deemed unsustainable without more market research tools

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Despite being around since 2012, nonfungible tokens, better known as NFTs, only went mainstream in the last year following the most recent bull market. 

For many, this asset class came out of nowhere, going from something completely unheard of to a major brand investment. The world has seen evidence of this by the actions of celebrities like Justin Bieber posting their NFT purchases on social media and companies like JP Morgan and Facebook (now Meta), solidifying their position in the metaverse. The market has since entered a boom, with a valuation of billions of dollars as a standalone ecosystem.

With more funds being pumped into this market, spurring on continuous purchasing behavior, many prospective investors have begun asking, “What the harm is in joining in on the meteoric rise?” 

Much like other investments in this world, NFTs are more complex than they seem, meaning that investing based on the trend “or hype” alone can be a dangerous game to play. Consider the parallels drawn from the dot-com bubble, which resulted in the overhyped valuation of several web-oriented companies. These one “lucrative investments” ended up fueling widespread bankruptcy in the market crash of 2000, a cycle that occurred again with the initial coin offering (ICO) bubble. Time and time again, bubbles are driven by wealthy investors who invested early on, rode the driven-up hype and sold for a profit long before the laggard investor even made their first purchase. 

But history isn’t meant to scare investors away from NFTs entirely. Instead, it is there to demonstrate an opportunity to improve the thought process behind investing. Consider that several web-oriented companies emerged from the dot com as profitable investments that continue to drive value. Therefore, the problem comes down to putting money on the line based on emotion rather than reason. As historical data shows, when fear and greed take over logic, most investors get burned.

Before investing in the seemingly lucrative market, investors are encouraged to thoroughly research the topic to understand the value of the underlying assets. At the current rate, NFTs are growing; many believe that it is unlikely the market will keep the same pace. For this reason, it becomes crucial that projects are being purchased with some understanding of the value each presents above and beyond their present-day hype.

Providing increased research power

However, most prospective investors are weary enough to know that they shouldn’t invest on a whim. Therefore, it would be unfair to attribute the action of “buying based on hype”  to the lack of knowledge. Rather, it is a lack of process.

Consider that the underlying value of NFTs is assessed differently than a traditional investment vehicle, looking at factors including ownership, utility, rarity and social proof, all of which can’t be found by looking at a financial report. Additional complexities come down to NFTs existing as part of a collection or group of assets that hold similarities while also being different enough to make some more scarce than others.

Collections like Bored Ape Yacht Club contain nearly 10,000 NFTs, with the most expensive one being sold for over $3 million and others being a fraction of an Ethereum (ETH) token. While many investors will gravitate to specific collections based on news, celebrity endorsements or Twitter since it is easier to value similar assets, it can be difficult to pinpoint a project itself as hundreds of thousands of assets may be at play.

Consequently, gaining this same level of knowledge about an NFT or a collection requires a significant amount of supporting research, starting with a tip from Twitter, Discord, news platforms and other marketplaces, followed by more in-depth research if the project is lesser-known. Upon doing a deeper dive, investors are encouraged to research the project’s creator, the technology and utility of the project, as evidenced by its whitepaper, and a look at rarity tools to determine what sets a specific NFT apart in a collection.

Navigating the mass NFT market

With the already steep learning curve that comes with purchasing and storing these digital assets, the requirement to stay active on social media for new project drops is often far too overwhelming for many to get started. For this reason, many analysts agree that an easy-to-use system that allows investors to discover promising new projects for their benefit and follow other NFT investors is crucial to sustaining growth in the NFT market.

That’s why NFT trackers like the Delta app are becoming increasingly popular for first-time investors and DeFi veterans alike. The Delta app is said to be among the world’s first mobile NFT explorers, enabling users to make stronger investment decisions with functionality for global search so that users can find collections to their liking. Users can discover new collections based on volume or other criteria by navigating to the NFTs tab on the markets page in the app.

Through a secure connection to an ETH wallet which can be done automatically or manually, users gain an overview of all their digital collectibles.

Learn more about Delta

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