Connect with us

Uncategorized

NFTs aren’t dead — they’re just resting

The market for nonfungible tokens (NFTs) might be struggling during this "NFT Winter," but there are signs of life if you know where to look.

Published

on

The market for nonfungible tokens (NFTs) might be struggling during this "NFT Winter," but there are signs of life if you know where to look.

Headlines predicting the death of Bitcoin are nothing new. Over the past decade, we’ve seen every permutation of why “Bitcoin is dead” imaginable, yet the current crypto winter has brought very few of these dire proclamations. 

It seems a little different this time. Maybe it’s hard to pen such a eulogy with Bitcoin (BTC) hovering around $28,000, and a spot Bitcoin ETF on the horizon. Doesn’t seem like Ethereum’s dead either.

But the blockchain industry and its commentators still need a corpse to poke at, and that’s what they’ve found with the putrid cadaver that is the nonfungible token (NFT) market.

Related: The economy is surging — which means it might be time to start buying Bitcoin

NFTs are dead. Deceased. Lifeless. NFTs are the “Norwegian Blue” from Monty Python’s Dead Parrot Sketch. And the grave dancing has commenced; to quote a recent Rolling Stone headline, “Your NFTs are actually — finally — totally worthless.”

Rolling Stone is right — most NFTs are indeed utterly worthless.

Yet that should not be surprising to anyone who’s been in crypto for a few cycles. Most of the ICO tokens from the 2017 bull market vintage were dead by the 2018/19 winter. Likewise, the countless DeFi protocol tokens post-DeFi-summer of 2020. 

Today, more than 1.8 million tokens have an aggregate market cap of a little more than $1 trillion. But the top 10 largest protocols and tokens account for over 93% of the total.

Do the math. That’s a long, long tail of worthless zombie coins. The vast majority of all tokens die. So why should NFTs be any different?

The barrier to entry to create an NFT project in the hope of striking it rich was (and remains) low. Anyone can, and seemingly did, create an NFT collection in a few minutes with a few keystrokes.

Related: Bitcoin ETFs: A $600B tipping point for crypto

So what happened when a frenzy of trading activity and money flooded into this new corner of the crypto market in mid-2021? The free market responded exactly how it was supposed to: it provided supply. And supply ≠ quality, especially in this industry.

We’ve seen the same cycle again and again, this just happens to be the first real NFT winter.

A-listers have quietly taken their NFT Twitter avatars down. Jimmy Fallon isn’t shilling apes with Paris Hilton on late-night TV. Ashton Kutcher’s Stoner Cats has settled with the Securities and Exchange Commission (SEC). A collective sense of embarrassment abounds.

NFT trading volumes have collapsed, from around $1 billion a week in mid-2021 to early-2022, to sub-$100 million today.

NFT trading volume by chain. Source: CryptoSlam

It’s bleak. But, as I said back in October 2021 about NFTs, “Peaks and troughs are nothing new, it's what emerges from them which is what's worth paying attention to.”

For those curious and open-minded enough to look beneath the surface of the “NFTs are dead” generalization prevalent today, there are signs of life amidst the rubble.

In September, news emerged that PayPal filed a patent application in March surrounding an NFT purchase-and-transfer system.

Pudgy Penguins continues to expand into physical toys, first selling on Amazon in March and recently expanding to 2,000 Walmart stores across the U.S. (Disclaimer: I own a fat penguin jpeg.)

Doodles have collaborated with casual footwear brand Crocs in a similar effort to merge the physical and digital, with a likewise similar collaboration between Gary Vee’s Veefriends and Reebok.

At a concert over the summer, Harry Styles fans could download an app featuring a self-custodial digital wallet for future NFT rewards. Meanwhile, Justin Bieber is collaborating with a blockchain music platform to turn a song into an NFT with royalty streams to the NFT holders.

The top auction houses continue to bring mainstream artists into the NFT world, Keith Haring with Christies for example, and Sotheby’s partnering with Ledger to offer a co-branded Ledger Nano X (hardware wallet) for buyers of premier digital art.

If you keep looking you’ll find more and more signs of life, because NFTs are not “dead.”

The fundamental technological primitive of what NFTs are and what they offer will not “die,” any more than blockchain will “die.” They will simply continue to evolve while the weak hands, weak teams, scams, copycats, and fast money fade into history, another footnote from another crypto cycle.

As we transition from this NFT winter into a new season, expect to see NFT projects that are more sophisticated and commercially viable, enriching the ecosystem in new and meaningful ways.

Tama Churchouse is the COO of Cumberland Labs, an early-stage Web3 incubator, and a founder of Digitali, a community-driven NFT Wiki that serves as a comprehensive database for NFT collections.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Read More

Continue Reading

Uncategorized

Will Resurgent Inflation Savage The Tech Trade

Will Resurgent Inflation Savage The Tech Trade

By Simon White, Bloomberg Markets Live reporter and strategist

Equity markets are facing mounting…

Published

on

Will Resurgent Inflation Savage The Tech Trade

By Simon White, Bloomberg Markets Live reporter and strategist

Equity markets are facing mounting concentration risks as just a handful of stocks drive returns. Not only that, the mainly tech-related names dominating the move are highly exposed to inflation which is on the precipice of re-accelerating. Investors face potentially steep downside, but it is possible to build a portfolio of companies well placed to weather a resurgence in price growth.

When one company’s earnings have the ability to influence the macro narrative and materially affect the $43 trillion S&P, it’s clear the threats from narrow breadth are elevated. Nvidia’s results, released on Wednesday evening, may have exceeded expectations and are on the cusp of taking the index to new highs, but that only underscores the reality the tech-heavy market leaves portfolios acutely exposed to inflation. This should be a clarion call that it’s time to act. What better time to fix the diversification roof than when the disinflation sun is still shining?

Concentration risks are at 50-year highs. The top five stocks in the in the S&P 500 now account for over a quarter of its market cap, from only about an eighth a decade ago. You have to go back to the time of the Nifty Fifty in the late 1960s and early 70s to see leadership as narrow as it is today.

Back then, it was the tech titans of the day — Xerox, IBM, Polaroid – that were among the few stocks disproportionately powering the advance. And in what could prove to be an omen for the current cycle, the Nifty Fifty’s fate was sealed by rising inflation, which triggered the most brutal bear market seen since the Great Depression.

It’s even more of a problem today as tech companies have high duration, leaving them singularly vulnerable to a revival in price growth. A greater proportion of cash flows in the future leaves a stock’s total present value at risk from higher real rates.

The benefits of avoiding high-duration stocks when inflation is elevated can be seen in the chart below. The blue line shows a rebalancing strategy that goes long low-duration stocks when US CPI is over its 10-year moving average, and high-duration stocks when inflation is under it (using the inverse of the dividend yield as an approximation for an equity’s duration).

As we can see, the strategy cleanly outperforms the S&P in real terms.

But we can do better than that. It’s possible to build a portfolio of stocks resilient to inflation that’s not just dependent on their duration. After all, it’s a pretty blunt instrument. Ideally we want to find stocks that should do well if inflation re-accelerates (as I expect it will – see below), but is not fully reliant on that outcome.

Companies that are capital light and have strong pricing power should be well-placed to weather – if not prosper in – elevated inflation. The companies should also have demonstrated real growth over the long term.

More specifically, screen for companies with:

  • over $1 billion market cap
  • real dividend growth and sales growth
  • low fixed costs
  • strong pricing power
  • reasonable valuations

That gives us a portfolio of about 15-20 names which is rebalanced monthly. The real return of the portfolio is shown in the chart below, along with the real returns of the S&P and the 60/40 equity-bond portfolio.

The portfolio is designed to be forward looking — the coming years are unlikely to look like the previous decades given we are now in an inflationary regime — seeking stocks that are robust to price growth that is above its long-term average and prone to lurching higher.

It is nevertheless reassuring to see that the portfolio does well on its backtest. It has outpaced the S&P in real terms over the last quarter century. It also outperformed in the rising inflation period during the pandemic. More generally, a strategy that went long the Inflation Portfolio when inflation was elevated, and long the market otherwise, fared better than the S&P over the last 25 years.

The current portfolio contains 16 names. All are good quality companies with most having reasonable valuations, the average P/E ratio being equal to the market’s. Only two are tech companies.

The most common grouping is industrials. Again, this is reassuring as in inflation regimes over the last five decades, the top performing sectors were steel, mining and chemicals.

Through the life of the portfolio (2000-2023), industrials has had the largest average weight, followed by financials.

Banks are generally not a good holding when inflation is high as they typically lend long and borrow short, and see the real value of their assets decline more than their real liabilities. But there are several non-bank financials, such as the CBOE (in the portfolio now) and MSCI, which are quality firms with strong pricing power who stand in good stead when price growth is elevated.

None of this would be necessary if inflation was going the way Team Transitory think it already has. But there is a mounting body of forward-looking indicators that expect inflation should soon re-accelerate. We may have already got a glimpse of this with the most recent hotter-than-expected CPI and PPI reports.

Still, with any portfolio screening strategy there are caveats. There are turnover and price-slippage costs that could materially affect the realized return. There is also, of course, no reason why the backtested past should look like the future.

Nonetheless, the deep concentration of high-duration stocks leaves the market as exposed to inflation as it has been since the early 1970s. The potential downside justifies a different approach that tries to mitigate inflation risks without becoming overly dependent on them. After all, we may soon find that the Magnificent Seven’s name sounds just as ironic as the Nifty Fifty’s.

Tyler Durden Thu, 02/22/2024 - 15:45

Read More

Continue Reading

Uncategorized

All Of The Elements Are In Place For An Economic Crisis Of Staggering Proportions

All Of The Elements Are In Place For An Economic Crisis Of Staggering Proportions

Authored by Michael Snyder via The Economic Collapse blog,

They…

Published

on

All Of The Elements Are In Place For An Economic Crisis Of Staggering Proportions

Authored by Michael Snyder via The Economic Collapse blog,

They were able to delay the U.S. economy’s day of reckoning, but they were not able to put it off indefinitely.  During the pandemic, the Federal Reserve pumped trillions of dollars into the financial system and our politicians borrowed and spent trillions of dollars that we did not have.  All of that money caused quite a bit of inflation, but it also created a “sugar rush” for the economy.  In other words, economic conditions were substantially better than they would have been otherwise.  Unfortunately, there will be a great price to be paid for such short-term thinking. 

From the federal government on down, our entire society is absolutely drowning in debt, and now it appears that our economic problems are about to go to the next level.

In early 2024, there are all sorts of signs that economic activity in the U.S. is really starting to slow down.

For example, we just learned that consumer spending “fell sharply” during the month of January…

Consumer spending fell sharply in January, presenting a potential early danger sign for the economy, the Commerce Department reported Thursday.

Advance retail sales declined 0.8% for the month following a downwardly revised 0.4% gain in December, according to the Census Bureau. A decrease had been expected: Economists surveyed by Dow Jones were looking for a drop of 0.3%, in part to make up for seasonal distortions that probably boosted December’s number.

However, the pullback was considerably more than anticipated. Even excluding autos, sales dropped 0.6%, well below the estimate for a 0.2% gain.

Sadly, the truth is that U.S. consumers just don’t have as much money to spend these days.

They are up to their eyeballs in debt, and delinquency rates have been spiking.

Many consumers are tightening up on their finances, and so it shouldn’t be a surprise that Disney+ lost more than a million subscribers during the fourth quarter of last year…

Disney+ Core subscribers (which include U.S. and Canada customers, as well as international users, excluding the India-based Disney+ Hotstar) dropped to 111.3 million from the 112.6 million reported in the previous quarter, according to Disney’s quarterly earnings results released Wednesday.

In early 2024, we have also seen large employers ruthlessly slash payrolls all over the nation.

The following summary of some of the most shocking layoffs that we have seen recently comes from Zero Hedge

1. Twitch: 35% of workforce
2. Roomba: 31% of workforce
3. Hasbro: 20% of workforce
4. LA Times: 20% of workforce
5. Spotify: 17% of workforce
6. Levi's: 15% of workforce
7. Xerox: 15% of workforce
8. Qualtrics: 14% of workforce
9. Wayfair: 13% of workforce
10. Duolingo: 10% of workforce
11. Washington Post: 10% of workforce
12: Snap: 10% of workforce
13. eBay: 9% of workforce
14. Business Insider: 8% of workforce
15. Paypal: 7% of workforce
16. Okta: 7% of workforce
17. Charles Schwab: 6% of workforce
18. Docusign: 6% of workforce
19: CISCO: 5% of workforce
20. UPS: 2% of workforce
21. Nike: 2% of workforce
22. Blackrock: 3% of workforce
23. Paramount: 3% of workforce
24. Citigroup: 20,000 employees
25. Pixar: 1,300 employees

During the pandemic we witnessed a lot of temporary layoffs, but the last time we saw large corporations conducting permanent mass layoffs on such a widespread basis was in 2008 and 2009.

And we all remember what happened back then.

Meanwhile, the cost of living continues to rise faster than paychecks.

For example, it is being reported that the cost of auto insurance has been increasing at “the fastest annual rate on record”

The cost of auto insurance jumped 1.4% in January, bringing the total annual gain to 20.6% – the fastest annual rate on record. When compared with early 2019, motor vehicle insurance is nearly 40% more expensive. Experts say the problem could soon get worse before it begins to improve.

Needless to say, most Americans have not seen their paychecks increase by 20.6 percent over the past year.

Of course just about everything else has been rapidly getting more expensive too, and that isn’t going to change any time soon.

On top of everything else, we are also facing an unprecedented commercial real estate crisis.

Our financial institutions are sitting on mountains of bad commercial real estate loans, and Kevin O’Leary is warning that “thousands more” will fail within the next three to five years

Regional banks are doomed.

That’s not necessarily a bad thing… if you’re prepared for it.

It’s been almost a year since Silicon Valley Bank (SVB) collapsed in March – the victim of idiotic management. But the sobering reality is the small banking crisis is far from over.

In the next three to five years, thousands more regional institutions will fail. That’s why I don’t have a dime saved or invested in a single one.

Is Kevin O’Leary right about this?

I don’t know.

We will just have to wait and see what happens.

But without a doubt, things certainly do not look good at this moment.

Needless to say, it isn’t just the U.S. that is experiencing economic turbulence these days.

Last week, we learned that the Japanese economy has officially entered a recession

Japan has lost its spot as the world’s third-largest economy to Germany, as the Asian giant unexpectedly slipped into recession.

Once the second-largest economy in the world, Japan reported two consecutive quarters of contraction on Thursday — falling 0.4% on an annualized basis in the fourth quarter after a revised 3.3% contraction in the third quarter. Fourth-quarter GDP sharply missed forecasts for 1.4% growth in a Reuters poll of economists.

The Germans are facing big problems too.

In fact, Germany is being called the “sick man of Europe” right now.

Interestingly, it is at this time that Jeff Bezos has decided to sell off billions of dollars worth of Amazon stock

Amazon’s billionaire founder Jeff Bezos has sold another $2bn worth of the company’s stock, bringing the total value of shares he has offloaded in the past week to $4bn, according to regulatory filings.

An Amazon filing on Tuesday showed that Bezos, who stepped down as the Seattle-based company’s chief executive in 2021 but remains executive chair, sold 12mn shares for about $2bn between Friday and Monday.

He certainly doesn’t need the cash.

So why is he doing this?

Does he know something that the rest of us do not?

I don’t think so.

Instead, I think that he can see what the rest of us can see.

Stock prices have risen to record highs even as the overall economy is clearly heading into a major downturn.

That makes this the perfect time to sell.

Jeff Bezos didn’t get to where he is by being stupid.  He can see what is coming and he is getting out while the getting is still good.

*  *  *

Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.

Tyler Durden Thu, 02/22/2024 - 16:20

Read More

Continue Reading

Uncategorized

Realtor.com Reports Active Inventory UP 15.7% YoY; New Listings up 10.9% YoY

What this means: On a weekly basis, Realtor.com reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For January, Realtor.com reported inventory was up 7.9% YoY, and down 40% compare…

Published

on

What this means: On a weekly basis, Realtor.com reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For January, Realtor.com reported inventory was up 7.9% YoY, and down 40% compared to January 2019. Now - on a weekly basis - inventory is up 15.7% YoY, and that would put inventory still down about 39% compared to February 2019.

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View — Data Week Ending February 17, 2024
Active inventory increased, with for-sale homes 15.7% above year ago levels.

For a 15th consecutive week, active listings registered above prior year level, which means that today’s home shoppers have more homes to choose from that aren’t already in the process of being sold. So far this season, the increase in newly listed homes has resulted in a boost to overall inventory, but while the added inventory has certainly improved conditions from this time in 2021 through 2023, overall inventory is still low compared to the same time in February 2020 and years prior to the COVID-19 Pandemic.

New listings–a measure of sellers putting homes up for sale–were up this week, by 10.9% from one year ago.

Newly listed homes were above last year’s levels for the 17th week in a row, which could further contribute to a recovery in active listings meaning more options for home shoppers. This past week, newly listed homes were up 10.9% from a year ago, accelerating slightly from the 9.5% growth rate seen in the previous week.
Here is a graph of the year-over-year change in inventory according to realtor.com

Inventory was up year-over-year for the 154th consecutive week following 20 consecutive weeks with a YoY decrease in inventory.  

Inventory is still historically very low.

Although new listings remain well below "typical pre-pandemic levels", new listings are now up YoY for the 17th consecutive week.

Read More

Continue Reading

Trending