In the world of cryptocurrencies, FOMO (Fear of Missing Out) is still alive and well, with lesser-known coins excelling once more in the aftermath of recent gains by market giants Bitcoin and Ether. This month, Cardano doubled in value and became the third-largest digital asset. Binance Coin is also up and running. In August, the value of a token called Avalanche tripled. Similarly, prices for pictures of rocks with laser eyes and cartoon portrayals of adorable animals are skyrocketing, often quadrupling within days.
There is little agreement between researchers and traders as to what is causing the hysteria. Some speculate that following huge surges, investors are shifting away from the stalwarts and onto fresh, more interesting offshoots. Others envision a world saturated in cash and ultra-low rates, pushing investors into increasingly bizarre assets.
After disappearing from the news amid Bitcoin's spring downturn, non-fungible tokens, which enable owners of art and collectibles to trace provenance, are making a comeback. Whether it is crypto investor Justin Sun spending 500,000 USD for a painting of a rock or comical representations of penguins and apes. NFTs, which are based on the blockchain technology that underpins cryptocurrencies, are once again at the heart of the bullish excitement that fuels digital markets.
Les Borsai just bought a Pudgy Penguin for his niece's birthday for $1,300. “I delivered her this penguin, and that penguin was valued at $7,000 a few days later,” said Borsai, co-founder of Wave Financial Group, blockchain-crypto asset management located in Los Angeles.
“And the first thought that sprang to me was why did I give the penguin to her?”
The increased enthusiasm aided in propelling NFT daily sales to an all-time high on August 6. It is not only the penguins, ducks, apes, and robots that are adorning the digital art auctioned at Christie's earlier this year. DraftKings launched its NFT store with a variety of sports memorabilia, like digital cards autographed by Tom Brady, the legendary quarterback.
According to Devin Finzer, co-founder of OpenSea, the world's largest NFT market, the platform anticipates seeing $1 billion in trading volume this month, up from $300 million in July and $8 million in January.
“We are witnessing a massive growth contour,” Finzer said, estimating that up to 6 million users will visit the site this month, up from 400,000 in January. He believes that hundreds of thousands of people use the website every month to purchase and trade NFTs, up from tens of thousands at the start of the year. The initiatives are attempting to emulate Beeple's success in generating worth through rarity.
Benjamin Tan, a savvy crypto investor, has taken notice. The 35-year-old businessperson has been collecting Pudgy Penguins NFTs over the last few weeks, claiming that their beautiful cheeks and sparkling eyes remind him of his 7-month-old daughter.
According to NFT Statistics, the average cost for each collectible in the collection has increased by more than a hundred times in the last month, to the equivalent of nearly $12,000. Tan managed to sell his most valuable penguin, one dressed in a pineapple suit on a beach, for 130 Ether, or about $410,000, a 160 percent increase in value in just nine days.
“People certainly flexed in the past with a Rolex or a high-end car,” said Tan, who resides in Singapore, “A highly unique profile image is becoming the current method to flex.”
With so much money flying around, it is no wonder that individuals are spending excessive prices for digital pet rocks and an unlimited number of other digital commodities that can be readily created, said Michael O'Rourke, JonesTrading's chief market analyst.