If NFTs Are Dead, Why Are Bored Apes Still Fetching $100k-Plus?

Someone please tell the Bored Ape Yacht Club that NFTs are dead, because no one is listening.

Most of these top Bored Ape NFTs – digital art that people either use to make art galleries or pin up to their wall in a frame in their NYC penthouse – still go for over $120,000. For some reason, Bored Ape #6588 just sold for $1.17 million.

Indeed, even as headlines herald the NFT implosion of 2022, such obituaries ignore what's really going on. The NFT craze isn’t going to turn out teenage millionaires every day anymore. With little hype left, investors will have to focus on real-world applications of NFTs, if they can find them.

Despite the weak digital assets market, the average price people paid for an NFT is up 2.5% to $371. Buyers are down 10.3%. Sellers looking to offload are down 16%. Overall sales are down around 10% to $10 million and change, according to the Non-Fungible Market Tracker.

People are struggling to sell their big-ticket NFTs. The Malaysian businessman who bought an NFT of Jack Dorsey's first tweet for $2.5 million last year struggled to get bids of more than a few hundred dollars when he tried to resell it in April this year. Maybe buyers realized that JPEGs aren’t worth millions of dollars.

That doesn’t mean NFTs are dying, as many of them are needed for games or special club memberships, like the Bored Ape Yacht Club. For investors in NFT platforms or the digital art itself, it means the speculative frenzy is over.

“The hype around JPG NFTs and their over-night millionaire stories helped to make people get familiar with the emerging Web3,” thinks Theresia Le Battistini, CEO & Founder of Fashion League, a game for would-be fashionistas who are ready to give blockchains a shot. “No matter the market situation, NFTs are the most interesting improvement in blockchain technology. NFTs are more than just images,” she says, calling them “unique digital assets” that often have a use case. “It could be for ticketing, shopping or gaming apps…NFTs will be present and will be the driver for Web3 mass market adoption, I think,” she says.

Oren Langberg CMO at MonkeyLeague, another blockchain game that uses in-game characters you can buy and sell, says that after the dust settles on the NFT bubble, “we will see, and are already seeing, NFTs with more actual utility and those are the ones that will survive the market volatility.”

Time for a commercial break. What is an NFT anyway?

NFT stands for non-fungible token. It’s generally built using the same kind of programming as cryptocurrency. An NFT is a digital asset that is almost always artwork (like Bored Monkey), but can be music, videos and items for use in games – things like magic swords or other items these digital characters can use in this online (mostly gamer) world.

They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos. NFTs are also supposed to be one of a kind and have unique identifying codes.

The NFT boom began in 2021. It turned hundreds of artists and influencers into overnight millionaires. As the hype went on, with Tom Brady and Cristiano Ronaldo getting in on the act, famous people began using NFTs as a fan engagement tool. Ronaldo sold one last year for $290,000. Binance, a crypto exchange, signed him up to join the NFT grist mill in June.

Global NFT sales in July 2022 stood at $647 million with 532,378 unique buyers and 5.6 million transactions. In January 2022, global NFT sales were roughly $4.78 billion with 1.07 million unique buyers and corresponded to 9.36 million transactions, led by Loot, Bored Ape and Crypto Punks – the Canadian makers of these pixilated headshots that look like something out of Atari 2600.

Last year, someone spent nearly $17 million at a Christies auction on a bundle of Crypto Punk NFTs. The buyer walked out without having to carry a picture frame.

NFT Darwinism: Only the Strong Survive

NFTs are a strange security for sure. Outside of buying digital furniture in a digital world, why would someone want a collection of Crypto Punks that exists in the cloud, and not a 5x5 painting of them on canvas that only you own?

Last year, R&B singer Trey Songz sold an “NFT album,” allowing supporters to directly buy from him rather than the label. Why Songz needed an NFT for that is beyond my intellect, but I wish, as a cryptocurrency investor, I understood the difference between Songs making an NFT album and him creating a website and sell his music direct to consumer that way instead of through a record label or iTunes?

Gaming seems to be the perfect use-case for NFTs, and everyone knows the video game market, be it PlayStation or a blockchain game played by a niche audience, is a growing market. However, this is more geared towards the blockchain Web3 gamers and not traditional games so much.

For example, late last year, Electronic Arts EA CEO Andrew Wilson called NFTs an important part of “the future of our industry.” But in an investor call this winter, the icon Madden and FIFA video game publisher told investors that NFTs were “not something we’re driving hard on.” He likened them to past venture capital fads for gamers, such as 3D, AR AR and now VR games.

“With every new innovation a lot of new startups pop up and a frenzy begins, while in bear markets the true builders put their head down and keep building,” says Hosam Mazawi, Co-Founder of Snook, a play-to-earn Gamefi. “There are a lot of unexplored territories in NFTs and their use cases. We introduced the first activity-tied staking that provides brands or any interested group of gamers to host their own branded environment within our platform,” he says.

“The gaming industry was the first to see NFTs potential,” says Val Maincard, CEO and founder of Maincard.io, a fantasy sports management platform that offers NFT cards for guessing the results of fights in the world's major sports matches. “The use of NFTs as an in-game currency gives it the most important quality – which is liquidity. This is the most valuable feature of a product in the long run. Do people want it, or not?”

Some real estate companies have also tried to create digital worlds where you would buy NFTs – which might be like the penthouse suite, a cool living room set – and maybe you can have virtual meetings there. If seems like a fantasy market, with the usual potential for massive run ups in prices. If investors catch the bulls running at the right time, they’ll be in front of the line, safe from harm. Catch that run late, and you risk dealing with that raging bulls pointy horns.

“The big mistake people are making is equating images of cartoon animals with the underlying promise of the technology that makes NFTs possible,” says Neil Stevenson-Moore, Chief Business Officer at the House of Kibaa in Vancouver. House of Kibaa is Canadian digital agency Looking Glass Labs's main brand, and is a Web3 design studio for the NFT and metaverse sectors. “At its heart, all an NFT does is prove ownership of something digital. And in a world where literally everyone is addicted to a digital device in their pocket - it’s insane to think this technology isn’t going to be transformational,” he says. “At House of Kibaa, we’re happy that the first wave of madness has passed. This way the true innovators will start to emerge.”

Investors who have been chasing NFT plays this year have lost almost everything. Enjin Coin ENJ and Axie Infinity AXS2 are down over 80% year-to-date.

The cryptocurrency market loves a shakeout. Remember, they all loved the death of the initial coin offering because that was going to usher in serious projects rather than garbage coins and scams. The death of the ICO eventually pushed Bitcoin to nearly $60,000. Will the bloodbath in NFTs eventually lead to significant gains from here for the best in the business? For sure, it will. Which one it is, though, is anybody’s guess.

Twitter TWTR , Reddit, and Instagram have announced plans to support NFTs for creators. Famous venture capitalist Gary Vaynerchuk launched an NFT collection called VEEFRIENDS to give exclusive access to his annual conference.

“The awareness only means that the future looks extremely promising and hopeful for NFTs,” thinks Ramkumar Subramaniam, co-founder & CEO at Jump.trade, an NFT marketplace in India. “This will create a new community of purpose-driven collectors rather than those driven by short-term profit.”

*The author of this article owns enjin coin and bitcoin.