Even as the crypto market suffers, non-fungible tokens or NFTs, — which are projected to feature heavily in the fledgling tech space called the metaverse — are still netting eye-popping amounts of money.
But a deeper look shows that this trend threatens bitcoin’s bullish bias based on historical data. This was recently observed by Chris Burniske, a cryptocurrency investor and Placeholder VC partner.
Why Rising NFTs Are Bad News For Bitcoin
Bitcoin’s recent tumble to below $38,000 pretty much shell-shocked most crypto investors, leaving some participants scrambling and others trying to figure out what is behind the crypto’s bad mood.
The co-founder of blockchain-focused venture capital firm Placeholder, Chris Burniske, shared his outlook for crypto and NFTs markets. Burniske suggested that the booming volumes and prices in the NFT sector could indicate an imminent prolonged bear market.
According to the crypto researcher, NFTs are the riskiest and the most illiquid assets and so they will be the last to enjoy a meteoric rally just before the bull market runs out of steam.
Burniske recalls that Litecoin (LTC) soared back in 2013 for weeks after the bitcoin rally had cooled off. Similarly, bitcoin peaked in December 2017 but ether extended its uptrend for a month. Additionally, BTC and ETH plummeted in tandem with stocks last December, leaving alternative layer-1s in the green territory.
He is now pondering whether BTC peaking before NFTs in 2022 is a sign of strength to come or the end of the bull run.
Bitcoin traded around $38,358.11 as of the time of publication. The cryptocurrency is looking at a third consecutive month of bleeding amid growing fears of global monetary policy tightening to temper inflation.
That said, Burniske thinks Bitcoin will be fine as long as it can reach the bottom of this route soon and there are no more adverse macro factors that will spook investors into selling everything.