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NFT auctions from Beeple, Madonna flop amid crypto crash

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The once-sizzling marketplace for NFTs has turn into a spectacular bust, as high-profile auctions increasingly flop and investors who plunked down hundreds of thousands for bizarre digital artworks now struggle to unload them at a tiny fraction of what they paid.

Last spring, the little-known crypto artist Beeple sold an NFT for an eye-popping $69 million. This month, he revealed he’d been working with Madonna for a yr to create a trio of racy NFTs that depicted the “Material Girl” giving birth to a tree, a centipede, and butterflies.

They sold for $135,000, $346,000 and $146,000, respectively.

“It was unexpectedly low,” Nick Rose, founder and CEO of NFT platform Ethernity Chain, told The Post.

The flop wasn’t unusual, nevertheless, amid the carnage that these days has engulfed so-called NFTs, or nonfungible tokens, that are unique digital assets on the blockchain which can be often used for art. Last March, Bridge Oracle CEO Sina Estavi bought an NFT of Twitter co-founder Jack Dorsey’s first tweet for $2.9 million, calling it the “Mona Lisa of the digital world.” Last month, he scrapped an auction to resell it after the best bid got here in below $14,000.

“This has been fueled by ridiculously inflated cryptocurrency prices and hysterical bidding,” Jeff Bell, CEO of LegalShield, a legal protection firm for consumers, told The Post. “This isn’t any different than the Gold Rush or the dot-com bubble where people get ahead of themselves — everyone desires to get wealthy quick.”

Madonna and Beeple’s NFT collection all went for under $500,000.

madonna and beeple
The cash raised from the NFTs can be donated to charity.

Madonna
The sale of Madonna’s NFTs were quite low.

NFTs are getting hammered partly because cryptocurrencies — the payment approach to selection for NFT sellers — are tanking together with tech stocks because the Fed hikes rates amid raging inflation. Bitcoin is off 58% from its all-time high of $69,000 in November. Ethereum — probably the most widely used cryptocurrency on NFT platforms — can also be off 60 percent.

Figures for NFTs look even worse. In line with NonFungible, the variety of sales are hovering around 24,000 a day this week — off from a September peak of 225,000 per day. Money spent on NFTs has also plummeted, with sales last week totaling $205 million — nearly 90% lower than their August high of nearly $1.9 billion, based on the research firm.

“NFTs blew up when stimulus checks were coming in but they grew too fast,” Rose said. “We’re going through a cool-down with the stock market, inflation, COVID, and Ukraine.”

nft activity The variety of lively NFT buyers and users has trailed off after spiking dramatically.Chainalysis

Still more troubling, based on some insiders: Bored Ape Yacht Club — whose cartoon likenesses of strung-out-yet snappily-dressed primates have generated an estimated $2 billion since their launch a yr ago — has recently seen prices for its NFTs tank. This week, its most cost-effective available on the OpenSea NFT marketplace was listed at about $183,135 — down sharply from an all-time high of $429,000 that was set at the beginning of the month.

The drop ensued after Elon Musk modified his Twitter profile to a collage of Bored Apes he had cribbed from a Google search — taunting a recent craze through which celebrities like Justin Bieber, Paris Hilton, Jimmy Fallon and Steve Aoki have blown a whole lot of hundreds of dollars to assert a singular, authentic Bored Ape for themselves.

“Seems kinda fungible,” Musk tweeted.

Elon MuskElon Musk briefly modified his profile picture to a compilation of assorted “Bored Apes.”Elon Musk/Twitter

Still, Bored Ape Yacht Club’s creator Yuga Labs claimed a recent launch of property within the metaverse did “unexpectedly” well. And earlier this yr, Snoop Dogg released a group of NFTs that went for $44 million in five days. Experts say that’s because figures like Snoop and Bored Ape have been constructing relationships within the area of interest.

“Key players like Snoop Dogg have done quite a lot of community constructing,” Rose said. “No one is spending hundreds of thousands on single items… the mania has faded,” but constructing a loyal following within the NFT space will sustain some creators, based on Rose.

Meanwhile, signs of broad weakness are growing. CryptoPunk #273 — from an NFT collective called CryptoPunk that has built a cult following within the space by any standard — sold for $1 million six months ago. Earlier this month, it went for $140,000. In February, Reese Witherspoon’s media firm Hello Sunshine partnered with NFT collective World of Women. The minimum buy-in for an NFT has since tumbled to $10,000 from $34,000.

snoop doggSnoop Dogg launched a group of NFTs that fetched $44 million in five days.Getty Images

cryptopunkCryptoPunk #273 sold for $1 million six months ago. Earlier this month, it went for $140,000.Bloomberg via Getty Images

Worries about fakes and outright theft haven’t helped. The Winklevoss twins — who own and operate Gemini Cryptocurrency Exchange and acquired NFT platform Nifty Gateway — have lost a few of their digital art cache after being sued by one user who claims he was snookered in an auction and tricked into buying a $650,000 NFT he didn’t want.

“Lots of collectors I do know don’t exchange there anymore,” Rose said. “I don’t.”

A spokesperson for the Winklevoss twins didn’t reply to a request for comment.

One report suggests 50% of all NFT owners have lost access to their NFTs. One user on Discord, a preferred messaging app within the crypto and NFT world, recently posted that he was leaving out of frustration it was a hotbed for NFT chatter. “NFTs are a scam in lots of cases,” the user said, adding that a growing variety of investors are “being completely screwed by NFTs.”

Winklevoss twinsThe Winklevoss twins own and operate NFT platform Nifty Gateway.AFP via Getty Images

The variety of lively NFT buyers and sellers within the second quarter has plateaued around 500,000 — that’s down from a high of nearly a million in the primary quarter and around 700,000 within the fourth quarter of 2021.

Ian Rosen, partner at The Tifin Group and former CEO of StockTwits, likened the NFT craze to the obsession with cabbage patch dolls or beanie babies.

“People think, ‘Hey, I made an image and put it on OpenSea!’” Rosen said. “But simply because it exists within the digital world doesn’t make it worthwhile.”

Still, those within the NFT space remain optimistic.

“With nearly $8 billion traded in the primary quarter of 2022, the market cannot really be considered to have collapsed. We’re seeing more of a type of stabilization,” NonFungible notes in a recent report.

jack dorseyJack Dorsey sold an NFT of his first tweet for $2.9 million. A yr later, the customer couldn’t get $14,000 for it.Getty Images

Critics, nevertheless, indicate it might be difficult to find out what corporations are selecting to measure and whether it’s accurate. For example, so-called wash trading — when sellers buy their very own NFTs using two different accounts — could make platforms seem like they’ve more activity than they really do.

“You’re not allowed to sell a fake Rembrandt, but we don’t see that sort of control here so persons are getting burned,” Bell says. “There’s problems with blatant fraud where people drive up the worth of NFTs by buying their very own.”

That points to a broader issue with NFTs: The burgeoning sector remains to be latest and largely unregulated. Until it’s a more regulated space, its as much as users to protect their pocketbooks.

“Mom and pa aren’t going to guard you,” Rosen cautions. “Should you don’t know who the sucker on the poker table is, it’s you.”

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