The NFT bubble is starting to burst, says the man who was one of the few who foresaw the 2007-2008 financial crisis in a book that some consider one of the most influential since World War II.
“The NFT thing is starting to pop,” Nassim Nicholas Taleb tweeted, author of the 2010 bestselling 2010 book The Black Swan.
Taleb cited the recent story of Twitter co-founder Jack Dorsey, whose first tweet was sold as an NFT last year for nearly $3 million. According to a CNBC article published this week, it only costs a thousand. According to CNBC, the buyer of the tweet, crypto entrepreneur Sina Estavi, announced last Wednesday that he would be selling NFTs on OpeanSea and would donate half of the proceeds to charity. As of Saturday, the highest bid was just over $18,000.
Taleb’s theory of “black swans” is dedicated to the appearance of ultra-rare events for which the market is not ready. In 2007, house prices were falling, and in the 2020s, this is the end of low rates and easy money. In other words, swans may not always be white.
The Federal Reserve is expected to raise interest rates in May as part of a more aggressive effort to bring down inflation. US consumer prices rose nearly 9% last month, the biggest increase since 1981. The market has been gearing up to eliminate ultra-low interest rates and cheap money for some time now. Taleb appears to be claiming that most of this money has been invested in speculative investments such as NFTs, and this activity is coming to an end.
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Changpeng Zhao, the billionaire founder of Binance, the world’s largest cryptocurrency trading platform, opined, in a recent interview with Fortune, reacting to the $69 million NFT art sale in 2021: “People have gone crazy.” The recipient of this fortune, the artist known as Beeple – Mike Winkelmann in real-life – worried that NFT art was in a bubble last year. He told Fox News Sunday that the internet was also a bubble and eventually burst.
“But it didn’t destroy the internet,” he said. “And so the technology itself is strong enough to survive this.”
Zhao also sees the fragility of the market but is quick to point out that he is not an art collector.
NFT token is a unique original digital asset that belongs only to its owner or owners. It’s a bit like a certificate of authenticity for art, music, videos, and even tweets. NFTs can be sold individually or as part of a collection, as is the case with the Bored Ape Yacht Club, a collection of thousands of digital monkey illustrations on the Ethereum blockchain. Those who purchase monkey graphics as NFTs receive membership to an exclusive club with community-only perks. Celebrities such as Tonight Show comedian and host Jimmy Fallon and Grammy-winning producer Timbaland currently use their Bored Ape NFTs as their Twitter profile photos.
A whopping $44 billion was spent on NFTs last year, Fortune previously reported. In 2009, The Black Swan was named one of the 12 most influential books since World War II by the British newspaper The Times.
