Earlier this month, an NFT depicting a pet rock was sold for over $200,000, emblematic of the resurgence of unconventional trends in the non-fungible token market. Simultaneously, the market capitalization of Pepe, a meme coin inspired by a cartoon frog, doubled within a few weeks. Additionally, the price of FTT token, lacking real utility and associated with the FTX exchange, tripled in the past month, driven by hopes surrounding the exchange's potential revival.
The crypto market is witnessing a revival of eccentricities and a resurgence of FOMO, as the anticipation of a swift approval for a spot-Bitcoin exchange-traded fund propels the overall market higher. This hype is not only lifting established cryptocurrencies but also buoying less reputable ones.
This recent surge in digital assets follows a nearly two-year crypto winter, during which the values of numerous dubious projects plummeted, some approaching zero. Aggressive regulatory interventions by the Securities and Exchange Commission led to the identification of certain crypto coins as illegal and prompted some promoters to exit the crypto space. However, it seems that this purging was only temporary.
"As prices rise, investors on the sidelines think they need to get in," explains Campbell Harvey, a finance professor at Duke University. "Many will violate the number-one rule of investment: Understand what you are investing in. Many will also violate the number-two rule by putting their money in an undiversified bet on a single token."
Social media is once again abuzz with posts hyping meme coins, including one aptly named Memecoin, which, despite having no functions, utility, or intrinsic value, has surged in value. Cory Klippsten, CEO of Bitcoin services provider Swan, notes the prevailing trend: "Looking for a new theme to rake in customer money for no value — that’s the theme in non-Bitcoin crypto. I guarantee there will be another hype cycle for alt coins, and more people will get hurt."
Static images of rocks tied to Ethereum and Bitcoin blockchains are fetching exorbitant prices once more. For instance, Bitcoin Rock #75 recently sold for almost three Bitcoin, approximately $112,900. However, these collections, like many NFTs, are held by a small group of individuals, and liquidity remains limited. Despite previous cautionary tales, NFT land sales are resurging, with projects selling digital properties within game territories.
Sara Gherghelas, an analyst at DappRadar, underscores the current climate of a mini bull market, infusing the NFT space with enthusiasm and speculative investments. Yet, this fervor can artificially inflate project prices that may lack long-term value.
TG Casino, specializing in anonymous crypto gambling on Telegram, has raised over $2 million in a token pre-sale, incorporating NFT sales to high rollers. While past token sales led to investment crashes, the current market dynamics suggest a renewed appetite for risk.
However, amid the rush into the latest tokens, some buyers fall victim to scams, experiencing what is known as being "rug-pulled." In the third quarter, rug pulls constituted 65.1% of all types of crypto attacks, according to blockchain security auditor Hacken.io.
"Optimists are seeing thaws in the crypto winter, and even green shoots," observes Aaron Brown, a crypto investor writing for Bloomberg Opinion. "If this really is early crypto spring, the good new ideas should suck the attention from the nonsense. If not, the junk should fade back to obscurity."
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