Over the years, we’ve discussed various iterations of the “blockchain” and some of the possibilities it has for finance, industry, and even gaming. We looked at What are NFTs and Why are They Going Crazy?, How Blockchain’s Unique Innovations Can Prevent Money Remittance Scams, How Is Technology Affecting Global Trading Markets, and Metaverse vs. Multiverse- What are They? And Where are They Leading? Over at InflationData, we covered Cryptocurrencies and Inflation, and Can Crypto Solve Venezuela’s Hyperinflation Problem?, which we followed up with How has Venezuela’s Bitcoin experiment Fared? So we’ve looked at Crypto quite a bit. Today we are going to take another look at NFTs, which looked a lot like a crazy bubble right from the start.
NFTs “Round Trip to Nowhere”
By Elliott Wave International
Tampa Bay Buccaneers’ quarterback Tom Brady is a non-fungible token (NFT) enthusiast. However, glory on the football field has not translated to this field of finance (Business Insider, August 8):
Tom Brady bought a Bored Ape NFT for $430,000 in April. He’s lost at least $194,000 on it since then. He paid 133 ether for it … which is $235,436 right now. Its best offer is $136,034.
Brady formed his own NFT company in 2021 and is one of many celebrities who became enamored with cryptos.
Yet, celebrity endorsements of cryptos have not exactly had a stellar record. Examples include a 95% plummet in the average price of NFTs sponsored by boxer Mike Tyson, a slide of more than 75% in World of Women NFTs backed by movie star Reese Witherspoon and a big tumble in the price of Bitcoin since movie star Matt Damon appeared in video advertisements in October 2021. And the list goes on.
The Global Market Perspective, a monthly Elliott Wave International publication that covers 50-plus worldwide financial markets, has been keeping subscribers apprised of cryptos. The July issue showed this chart and said:
This is from the August Global Market Perspective:
Barron’s reported on August 4 that “mom and pop investors are pouring money into cryptocurrencies.” Retail investors are piling into bitcoin “at the fastest rate in history.”
Often, such zeal can serve as a contrarian indicator. On the other hand, manias can persist before they finally end.
This is an ideal time to consult the Elliott wave model. Keep in mind that no method of analysis offers a guarantee, however, the Wave Principle does reflect the repetitive patterns of investor psychology.
As Frost & Prechter’s Elliott Wave Principle: Key to Market Behavior says:
The Wave Principle is governed by man’s social nature, and since he has such a nature, its expression generates forms. As the forms are repetitive, they have predictive value.
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This article was syndicated by Elliott Wave International and was originally published under the headline Non-Fungible Tokens (NFTs): Another Financial “Fumble”. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
