Photo: GettyImages
When crypto entrepreneur Sina Estavi purchased the NFT of Twitter’s co-founder Jack Dorsey’s first-ever tweet back in March 2021 for a staggering $2.9 million, the world was divided into two groups.
Some pointed to the sale as proof of both the NFT concept and the wider demand. Others couldn’t help but be completely baffled at the absurdity of all of it. I fall into the latter, struggling to process the fact that someone spent $2.9 million on a digital certificate that serves as proof of ownership for a tokenized version of a tweet that says “ just setting up my twttr,” while the tweet itself still lives on Twitter, and the owner of said tweet could delete it, or make further NFTs of it.
Still, the pointlessness of it didn’t appear to bother Estavi. Shortly after winning the auction, he did little to play down his bullishness for the future of the NFT. In an entirely-serious tweet, he wrote, “I think years later people will realize the true value of this tweet, like the Mona Lisa painting.”
Well, just one year later, a different reality has set in.
When Beeple’s ‘Everydays — The First 5000 Days’ digital artwork sold at a first-of-its-kind auction for $69,346,250, it triggered a frenzied gold rush. People were turning to everything and anything and minting them into NFTs, slapping on some line about community or immeasurable value, and selling them to buyers who were eager to snap them up at a ‘low’ price and sell them to the next eager buyer. When Jack Dorsey minted his first tweet and put it up for auction, it was right at the beginning of this purple patch. NFT interest was skyrocketing, floor prices were rising, and the media was feeding the hype train. On reflection, as crazy as it sounds, the $2.9 million price tag made sense in that hyped-up climate.
So on April 6, when Estavi put the NFT back up for auction on OpenSea at a brain-melting price of $48 million, he was probably looking forward to making his money back (and then some) and relaxing in the knowledge that being stuck with a pointless digitalized tweet would soon become someone else’s problem.
But Estavi has misjudged the current market. Just over 12 months after his initial purchase, the boom has gone a little bust. Search traffic has fallen around 60–70%. The floor price is way down. The entire NFT market cap has dropped from a high of $23 billion to around $10 billion, losing over half its value. Then, there’s the increased regulatory scrutiny, the countless scams, and the far-too-many projects that have done nothing but fatten the wallets of the creators.
In sum, it’s a very different landscape to the one a year ago.
By the time the auction closed on April 13, just seven offers were made, the highest of which was 0.09 ETH (around $280). The lowest was 0.0019 ETH, around $6. Since the auction closed, several offers have come in, though a far cry from the asking price. If Esatvi accepts the current highest bid, which stands at $6,823.54, he’ll get a whopping 0.2% of what he paid for it (and even less if he donates the half he promised to charity.) It should be noted that Estavi is not obliged to sell the NFT. Speaking to CoinDesk, he said, “The deadline I set was over, but if I get a good offer, I might accept it, I might never sell it.”
No one wants a 99% loss on their CV, so he will likely choose to ‘hodl’ with his ‘diamond hands,’ while praying the market hits another hot patch, and joining the community in trying to drive up hype and invent demand.
But he could be waiting a long while.
The NFT market is a bit of a mess at present, and is undergoing a resetting of expectations. Prices for most of the assets are now too high for entry-level buyers (and the potential profit from resale is less guaranteed), meaning the potential audience for those with digital assets to sell is shrinking. As result of this is that a lot of the buying and selling now goes on between the same communities (or worse, engaging in wash-trading, where sales occur between accounts linked to the same person). So what is the true market value at present? It’s hard to gauge, and harder to predict whether it will recover.
And while I feel like a broken record writing this, the market will always struggle to cement itself until it solves its major problem: finding real, tangible use-cases for the NFTs that can justify the ludicrous values they demand.
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