The fall of cryptocurrencies has also led to that of the market for non-fungible tokens (NFTs). These digital objects associated with a certificate that serves as a title deed have fascinated since 2021, so much so that some of them have been sold for tens of millions of dollars. This has brought joy to creators who have been able to generate huge income, but also to investors who have discovered a new art market in which to speculate.
Yet considered as one of the emerging technologies at the beginning of the decade, this market clearly declined. Inevitably, investors are now left with paltry value NFTs. To try to limit losses, to recover lost money or even to make a profit, they try as best they can to find a solution. For creators, the situation is the same: while some specialized in these digital assets, they are selling less well than they did a few months ago. Now they’re trying to get back to the real world…
The decline of the cryptocurrency market…
At the beginning of 2022, most cryptocurrency courses are doing well. The bitcoin is therefore worth more than 42,000 euros and ether is around 3000 euros. Many people decide to sell their assets to receive their profits in fiat currency. Indeed, central banks have revised their key rates upwards, which has led many investors to turn to more traditional currencies.
This mass selling and the global geopolitical context caused by the war in Ukraine will lead to the loss of several players in the cryptocurrency industry. First, in May 2022, bitcoin has dropped dramatically. Subsequently, it will be Stable currency Earth that will collapse. These cryptocurrencies that were initially designed to provide some stability in price volatility, it will not have survived, for some, the heavy decline of ether and bitcoin.
The fall of cryptocurrencies will inevitably lead to the collapse of everything that can revolve around them. This is the case with the NFT market which will also sink throughout 2022. According to blockchain analytics firm, Chainalysis, between January and March 2022, more than $19 billion was spent on acquiring NFTs. This corresponds to more than half of the sales made this year in this market. Since April, that spending has dropped by 87%, reaching just $442 million spent in November.

This graph corresponds to the NFT sales made during 2022 on the OpenSea platform, in millions of dollars. The peak in early May is when the cryptocurrency market started to decline. Chart: Hildobby / Dune Analytics.
During the summer, several platforms known to process cryptocurrency exchanges go bankrupt or are forced to freeze their operations. This is the case with Celsiusbut also from the second largest platform in the world, FTP extension, led by Sam Bankman-Fried. Overnight, hundreds of thousands of customers find themselves unable to withdraw their funds or exchange them.
… dragging the NFT market down
At the same time, the cryptocurrency market is becoming less secure. Market players have suffered a series of disappointments and scandals that have only tarnished an already derided image. In June 2022, the famous collection Bored Bee Yacht Club was hacked, with its attackers successfully recovering 133 NFTs worth over $3 million at the time.
The case of the Binance platform also highlights some of these abuses. The company announces that it has been a victim of a cyber attack causing him to lose $100 million. At the same time, she is accused have allowed money laundering nearly $2 billion between 2017 and 2021.
For the Financial TimesDevin Finzer, CEO of OpenSea, a leader in NFT markets, spoke about this situation which he considers unprecedented. ” NFTs cannot exist without an ecosystem that drives them and around which they gravitate. The macro climate that existed around them has changed dramatically, which has affected the way investors and creators behave “.
To generate the digital certificate to prove that a person is the sole owner of the non-fungible token, the transaction that led to the acquisition of the NFT must go through the blockchain. This technology is the very foundation of how cryptocurrencies work, making them the preferred means of payment for acquiring NFTs.
It would be possible to obtain these digital objects without going through cryptocurrencies, but this would require the development of a blockchain that does not revolve around these assets. This is what China did by creating the beginning of the year 2023, own NFT platform based on a custom designed blockchain ever since the country has banned any transaction made using cryptocurrencies.
Investors try to make up for their losses… through taxes
As NFTs find it harder to sell, one company has decided to come to the aid of investors. ” While every type of investment has its losers, many of the NFTs we invested in weren’t just down; now they were totally useless… fruitless… unsellable says the company on its website.
Literally translating to “Unsellable,” this service launched by Skyler Hallgren a month ago now has 5,000 NFTs and its founder, Skyler Hallgren, hopes to hit 15,000 tokens by the end of January 2023. offering them to buy back their worthless NFTs and thus allow them to recover part of these losses”, specifies the founder of the service for The Guardian.
In many countries, including France or the United States, it is possible to report losses related to NFTs. To do this, it has to sell its non-fungible tokens, even at a fraction of its initial price. The purchase price minus the sale price is the amount that can be deducted for tax purposes. Naturally, the investor will have to prove his purchase and sale. Note that these NFTs must have been obtained during the year 2022 to qualify for this deduction starting this year.
Creators try to diversify into other industries
This NFT crisis is affecting creators who were focusing on the digital market and hard to offer non-fungible tokens to their productions. Instead of complaining about their fate, they don’t hesitate to invest or try to interfere in the markets that work best. ” If your sales aren’t predictable, consistent, and your revenue isn’t recurring, you need to figure out how to diversify your revenue streams and grow. says Drew Austin, co-founder of Knights of Degen, a collection of NFTs related to sports and the medieval world.
As the Financial Times points out, this is the path taken by Doodles, a series of children’s NFTs that has enjoyed some success. Its leader has decided to collaborate with the singer Pharrell Williams to produce animations and clips that will accompany his musical works. ” We’re heading into an economic environment that should be a little slower over the next couple of years, and what will allow us to bounce back is entertainment “, explains Julian Holguin, general manager of Doodles.
In another style, Pudgy Penguins, an NFT collection about penguins, has capitalized on the craze for its digital artwork to land several business deals. NFTs owned by some investors will be used to produce soft toys and children’s books. A portion of the profits generated will be offered to the owners of these non-fungible tokens. A give and take deal.

Here is the range of soft toys that will be offered in supermarkets and toy shops by Pudgy Penguins. Initially, their design is associated with an NFT held by someone who bought it using cryptocurrencies. Photography: Squat Penguins.
Ultimately, Knights of Degen decided to take a more evasive approach to their initial offer. He just invested in a minor league football team, a brewery that makes IPA beer, or a company that makes vodka-based sauces.
According to Drew Austin, the group was inspired by the business model of one of the entertainment giants, ” Disney started by making Mickey Mouse, and from there you have the theme park and the shows and the movies and the merchandise and the toys and all these different things. We kind of want to go down that similar trajectory “.
In 2023, investors and creators will have to keep looking for new opportunities. For the OpenSea leader, the NFT crisis should last all year.