Why has NFT recently outperformed bitcoin and digital currencies? The experts answer

Despite the decline in the price of digital currencies in recent weeks, the NFT market is still growing strongly. It seems that in addition to the emergence of this technology and the desire of people to test them, the spread of NFT has been influenced by psychological factors.

According to The Block, the NFT market started the new year with force. NFT was not even affected by the wider financial market crash, which affected many markets, such as the US stock market and digital currencies.

Digital currencies such as bitcoin, which play the role of market leader, have fallen by several tens of percent since the beginning of 2022. The decline is due to the same great fears that fueled the majority of the US stock market in January. Despite concerns about rising US bank interest rates and their impact on the digital asset market, NFTs, a market that sells digital collections and works of art, has had a good start in 2022.

Thomas Bialek, author of The Block website, writes about the phenomenon:

Looking at the performance of the price floor of the most popular NFT collections over the last three months, it can be seen that there is a significant difference between the price of these well-known NFTs, the price of Atrium and the price of Bitcoin.

Comparison of the price performance of incomparable tokens, Bitcoin and Atrium
Compare the pricing of the NFT, Bitcoin and Atrium collections

Read also: What is an indispensable token or NFT?

On the other hand, during this period the lower price limit between the different NFTs differed from each other, while the digital currencies themselves entered an upward trend in the last 24 hours.

The difference between the two markets shows the degree of dynamism of the digital currency ecosystem. This dynamic means that some market segments can be expected to rise at the same time, while the rest of the market is in recession; But what exactly saved NFT from collapse?

Sam Bankman-Freud, co-founder of the FTX Exchange, said he was certainly surprised by NFT’s resilience to the market crash of the beginning of the year. Many of these events are related to psychological factors, he said.

“NFT is easy for a trader to buy and sell,” he said.

The fact that these tokens are “incomparable” makes them less liquid.

According to Bankman Farid, the general nature of NFT makes them harder to sell than tokens held by individuals in exchange for Kevin Bass.

The CEO of FTX continued:

I am also a little surprised by the recent growth of NFT. The fact that anyone can tell you you own NFT makes it harder to sell; Because it’s harder to give up an asset in front of the public than it is to make portfolio changes that only you can see.

Also, it’s better to think of NFT as a luxury item to buy for display.

In addition, according to Arthur Cheong, founder and CEO of DeFiance Capital, people are less likely to sell their NFT at a loss than assets such as ordinary, more liquid tokens. “The psychological dimension of this issue is also very interesting,” he concluded.

The post Why has NFT recently outperformed bitcoin and digital currencies? Experts’ answers first appeared in Digital Currency.

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