The Scoop: A Bi-Weekly NFT & Digital Art Newsletter 8
The Scoop #8 – September 20th, 2022
In our 8th edition of The Scoop, we discuss inflation’s impact on the crypto markets, NFT sales volumes, and spotlight the founder of Art Blocks.
CRYPTO MARKETS
CRYPTO COMMENTARY
The bumpy road continues for markets across the board as the Fed has indicated that interest rates will remain elevated for the foreseeable future. Markets reacted negatively to Jerome Powell’s comments that the Fed would continue to raise rates as high as needed and keep them there “for some time” to tame inflation, which is running much higher than its 2% target. Traditional equities and cryptocurrencies alike saw increased volatility after the remarks, and more is expected as Fed President John Williams pushed back on the idea that there would be a rate cut next year.
Looking at the Fed funds rate level over the last 10 years shows the healthy and natural rate hike cycle begun in 2016 to keep the right balance between growth and potential inflation. As COVID, a black swan event, hit the global economies in an unprecedented way in early 2020, the Fed slashed the interest rates back to near zero (shaded area on the graph). While the short term pain from the pandemic was blunted, this allowed for inflation to grow very quickly unchecked as the economy reopened. It’s worth noting that despite the spate of recent hikes, the Fed funds rate is now at the levels we saw just before the pandemic. Although inflation slowed down a bit in July to an 8.5% increase year-over-year in CPI, we are still at levels not seen in the last four decades.
The reactions of the market aren’t a surprise, and since many investors are still fleeing risk, the major indexes and tokens could continue their descent. We are still teetering on the edge of a recession, with the next six months being crucial for a “soft” landing.
WHAT’S THE BUZZ?
In the world of NFTs, what is the single most important piece of security? A seed phrase.
A SEED PHRASE
- Every seed phrase consists of 12-24 random words pulled from a list of 2,048.
- If access is lost to your wallet or it is deleted, you must have the seed phrase to restore your access.
- There is no one to call for help if a seed phrase is misplaced; all of the contents in the wallet are lost.
- The seed phrase must be kept secure at all costs!
- One of the largest phishing scams seen in this space is malicious actors pretending to be from Metamask or Coinbase and asking people to verify their seed phrase. Nobody from any of those companies will ever ask for it.
NFT BLUE-CHIP COLLECTIONS
Top 5 NFT Collectible Collections
Top 5 NFT Photography Collections
NFT COMMENTARY
While the usual suspects are in the top NFT charts, there is nothing usual about the trends that we’ve been seeing in the NFT markets. We’re still seeing the consolidation behind Bored Apes, Cryptopunks, and the Art Blocks collections, which is expected for the blue chips. But the real story is in the number of NFTs being sold and overall cash volumes.
Looking at total number of NFTs sold, summer was business as usual. The count of NFTs being sold looks healthy and doesn’t hint at a market downturn. The data points to the number of sales being in its expected range.
When we look at the overall monthly volume on the Ethereum network (measured in USD) we’re seeing a summer slowdown with considerably less currency changing hands. We understand it’s a bear market for crypto and that’s a factor, but this leads us to believe it really is a bear market for NFTs as well. People are still buying NFTs but aren’t paying as much. The average price per NFT has dropped considerably.
The most recent test for the secondary NFT market came from the Sotheby’s MaxStealth Collection sale on Sept. 14. It was the first NFT single-owner live auction, and it opened the door for this concept moving forward. Pieces from XCOPY, Pak and Beeple were included in the 26-lot offering. The timing of the auction was a bit puzzling. With the unease in the global economy and crypto space, it seems that Sotheby’s bet the quality of NFTs on offer would offset the pressure from the larger macro-economic picture. We were able to derive a lot about the health of the high-end NFT market from this sale, especially how valuations are tracking in a bear market. With several pieces withdrawn or unsold it seemed that demand did not meet the Sotheby’s sales expectations – the sale achieved an aggregate sale price of $1.7m against a total pre-sale low auction estimate of $2.9 million. Lots above the $100,000 mark seemed to struggle with the exception of the XCOPY piece, while mid-value lots from Beeple, Hackatao/Coldie, and Alessio De Vecchi sold above their respective high estimates.
NFT ARTIST SPOTLIGHT
Erick “Snowfro” Calderon
The man, the myth, the legend behind Art Blocks has been a force in the NFT space since he sold his Cryptopunks to fund his new project. Since its inception, Art Blocks has become the epicenter of generative art in the NFT space. From Fidenzas to Ringers, some of the most pivotal collections have found a home under the Art Blocks umbrella.
Before Art Blocks, Erick dabbled in painting and other forms of colorful art yet never sought out gallery representation. However, when it comes to generative art, his Chromie Squiggles have become one of the grails in the NFT space since their launch. Working in 3D rendering software called Three.js, Erick adapted one of the sample scripts – a rigid squiggly line consisting of squares – and smoothed the lines out and added movement, rainbows and translucency. Most recently, the Chromie Squiggles popped up on tickets for VeeCon, a conference hosted by Gary Vaynerchuk who is also a Web3 entrepreneur. Rumor has it they’ll soon be on a football jersey somewhere in the EU, bringing further exposure to this new breed of art.
After making a splash in 2021, Art Blocks announced a partnership with Pace Verso in June 2022 bringing two of the most prominent players in Web3 and contemporary art together. This venture will open the doors to new exhibitions and collaborations between the traditional art world and the NFT space. Each has a lot to bring to the table, so we’re looking forward to seeing where this goes.
NFT & CRYPTO NEWS
- It’s Time to Separate NFTs from Digital Art
- Starbucks “Odyssey” is getting on the blockchain
- Bored Ape NFT Band to Make Music with Beyoncé-, Timberlake-Linked Productions
- Pace Verso and Art Blocks Detail First-Ever NFT by A.A. Murakami
- An A.I.-Generated Picture Won an Art Prize. Artists Aren’t Happy.
- LG Bringing NFT Art to your TV
- Olafur Eliasson launches a virtual reality work and NFT commissioned by MetaKovan- the man who paid $69.3m for ‘that’ Beeple
- Is it a Pyramid Scheme if they tell you it’s a Pyramid Scheme?
- The Merge is coming
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