NFT Investment Outlook in 2022
Nothing is changing the digital financial landscape of the world right now than Web 3 products like Blockchain technology and cryptocurrencies. Evangelists of investing reiterate how these decentralized innovations will revolutionize people’s relationships with money and how the internet is built. But as market players and the general public become aware of this potential, what’s the NFT investment outlook in 2022?
As a potential investor, your main aim is to get a return on investment or ROI from the assets you acquire. The NFT market is young and volatile, but 2021 was a prominent year in popular trends for this type of fresh investing. Going into this year, critical drivers expected to bludgeon the crypto space will include Blockchain gaming, retail operators, music, and art.
There are hundreds of new NFT projects every day, and there are already millions of these specialized tokens out there. Due to this new market’s volatility, you can make potentially huge returns from strategic purchases while diversifying your portfolio. Read on to get a perspective of the non-fungible token investment outlook in 2022.
New Interest and Players Gave Credence to NFT Investment in 2021
The non-fungible token or NFT market established itself in 2020, setting the stage for exponential growth for Blockchain collectibles trading in the following year. Although they’ve been around since 2014, in 2021, this investment derivative technology broke into the mainstream. Total sales ballooned from $10 million to $22 billion by year’s end, an unprecedented increase.
Due to the growing popularity of decentralized finance or DeFi products, the NFT market is poised to have expanded three times its size by 2030. In this digital transaction sector segment, avatar NFTs or digitized headshots are the most promising category of non-currencies.
According to experts, the NFT market has emerged from the peak of inflated expectations to a plateau in productivity. 2021 saw numerous new investment players arriving into the segment, most crossing over from cryptocurrencies and Blockchain-related technology. Key actors, however, came from auction markets, traditional art collectors, packaged goods, fashion, and finance.
Analysts are paying close attention to blended reality offerings, such as applications mixing online NFT ownership with a unique offline experience. However, you can’t mention 2021’s impact on NFTs without discussing the metaverse. That’s the collection of interoperable platforms that allow migration from one to another with the same digital possessions like avatars while offering virtual real estate.
What’s the Perspective on Investing In NFTs in 2022?
NFTs or non-fungible tokens work on similar programming formats of the Blockchain and DeFi applications similar to cryptocurrencies. But unlike fungible coins like Bitcoin and Ethereum, they’re unique, can’t be replicated, and are universally accepted as verifiable digital assets. Although the ecosystem is still under construction, the groundwork for authenticity solutions, low energy minting, and secure storage is established.
Significant marketplace heavyweights drive the checking of regulatory and participation boxes, improving investor confidence. Celebrities also jumped onto the NFT bandwagon, with famous musicians, film actors, and other artists on the forefront as creators and collectors. Besides investments, thought leaders contemplate that NFTs will alter culture and society.
The new version of the old patronage system reinvents closer relationships between fans and creators, letting the latter create and directly engage with followers. Some of these ideas may not see fruition in 2022 but can produce new unpredictable trends. Demand for branded NFT assets in digital-only environments gives analysts positive expectations regarding NFT-related company stocks.
There will be a rise in sales volume, price, interoperability, and breadth of use cases reconfiguring how investors interact with digital media ownership. But there are challenges surrounding questions of utility and value for the investor, while the process of buying NFTs remains complicated. Apart from these hoops to jump through, these tokens are still susceptible to sophisticated hacker attacks and increasing fraud.
Conditions Making NFTs Risky Investments in 2022
For investors, knowing the risky and speculative nature of NFTs provides determination for the safest level of exposure. Currently, long-term investments are better serviced by allocating a small portion of your portfolio. They have no intrinsic value except what a buyer attaches to them, only valuable as much as a buyer is willing to pay for it.
For an NFT to be successful, it behaves less like a bond or stock but more like a strong brand. Unless they’re buying it for the artwork, the average investor sees a lot of inherent risks in NFTs, but the biggest downside is the fees involved in their purchase.
NFTs are based on the Ethereum Blockchain, and you need some ether to connect your crypto wallet to the non-fungible token marketplace. Widespread adoption leads to increased transactions, and gas fees for acquiring an NFT are upwards of $100 to $200. Investors, therefore, opt for risk-free investing, putting up only what they’re willing to lose or buying them as collectibles and not as an investment.
But while some experts scream fad and bubble, artists and creators claim that NFTs are a future form of monetization. There’ll be more mainstream adoption of NFTs for 2022 since their real value is in the smart contract Blockchain technology behind them. They’ve essentially showcased what can be done at every chain level besides buying low and selling high. (3)
For broader adoption, NFT marketplaces will become more accessible to the everyday investor by migrating from their leading P2P trading platforms like OpenSea. Popular exchanges like Coinbase have already announced the creation of such a platform, enabling users to sell, buy and collect NFTs.
How Do You Invest and Make Money with NFTs in 2022?
The NFT marketplace has displayed significant growth in these last two years, with 73% of traders making their first purchase. The market is expected to reach $60 billion-plus by 2031 if volumes consistently grow and sales don’t slow down. Profits will be dependent on the asset’s longevity, but overall, NFTs as an investment are a safe way to realize profits.
Thanks to mainstream approval, you’ll need a comprehensive NFT investment strategy to see value increases in 2022 potentially. Depending on your target asset, you can make money off NFTs through art, real estate, gaming, marketplace platforms, and marketing or promotions.
Digital Art Investments
The pioneers of NFTs are digital artworks, which made trading these Blockchain derivatives popular. Not only can you trade art pieces, but you’ll rely on this technology to secure ownership within the network, and that’s the real reason behind these trades. Taking into account their widespread availability, and with new ones minted daily, NFT art is an excellent investing move.
2022 will see the market for artwork NFTs improve, and collecting from creators may see their value rise. Technological leaps are being made to keep the Blockchain network secure. Speed and low gas fees are also in the making. That’s especially true with NFT supportive platforms migrating away from Ethereum’s overloaded and expensive transaction ecosystem.
Real Estate Investments
The concept and transfer of ownership are complicated in the real estate domain, but there’s high volume trading involved. NFTs take out the intermediaries, central authorities, and financial institutions that make investments in this sector quite challenging. Converting an asset’s documentation into an NFT makes it more secure than the centralized exchange version.
For an investor looking to gain traction in real estate in 2022, NFTs are a top-tier investment opportunity with massive returns.
Gaming Investments
One of the latest trends in the digital space is NFT games, following the novel concept of play to earn. The Blockchain is revolutionizing gaming in the present spectrum and making it the perfect investment vehicle for 2022. Many protocols are also emerging on this platform, such as yield pooling, staking, and much more.
Marketplace Investments
The core to NFT trading, buying, and selling is the marketplace, a unique platform created on Blockchain technology. All trading of NFTs is initiated here, securing transaction details and providing business opportunities for investment entrepreneurs. It’s a pivotal point for investors to adopt, develop and attract users to a unique platform, generating revenue through auction, listing, or minting fees.
A marketplace makes excellent investment sense if you’re looking to experience short-term profits with NFTs in 2022.
Marketing or Promotion Investments
Due to its ability to bring in users at every level of commerce, NFT marketing is a suitable investment for 2022. It involves extensive advertising or promoting to bring entrant users onto trading platforms via social media, content, and email marketing. These campaigns have the potential for immense revenues as investing strategies due to the perceived level of growth in Blockchain technology.
What Does the NFT Marketplace Promise Investors in 2022?
Although the technology surrounding NFTs is novel, the last few years have proven it’s not a fad that’s about to go away. Even when the initial excitement wears off, there’ll be creators, traders, and collectors carrying on with the paradigm. Despite changes in interest, usefulness, and value, the lack of restrictions and the many aspects of Blockchain sustainability will ensure this market never settles down.
If you decide to invest in NFTs in 2022, it’s wise to establish a threshold for how much you’re ready to forfeit. Consider it as a long-term investment and never a get-rich-quick plan, for which you’re better off purchasing and holding to flip when the pricing or fee environment is favorable.
Confidence is high that the sector will realize critical elements such as more reliable storage options and better regulation. Increased transparency and security for all transactions help creators to protect their NFTs from misuse or theft while providing a way to track participation and verify identities.
Creations are better attributed to transforming trade, online auctions, and e-commerce, opening doors like;
- New markets
- Demand and supply increasing
- Authentication
- Buyers’ interest in digital art
- Copyright for everyone
NFTs may be a new market, but there’s evidence that by the end of 2022, they’ll be exceeding the $20 billion sales mark. They can potentially change the financial and gaming industries, not to mention art, especially with new entrant 3D photos creating exceptional assets.
What’s Driving Growth for the NFT Market In 2022?
The metaverse, a novel concept explored by Meta, is a virtual world in a game-based environment where participants acquire real estate and other assets. As per sales realized in 2021, it holds a significant share in the NFT market, suggesting that we shall witness significant growth.
AI-based virtual characters in strategy role-playing games evolve in intelligence either fed by the player or learned during the game. Such characters will eventually become tokenized and later sell on various NFT marketplaces like OpenSea and Raible. Due to growing millennial involvement, the metaverse technology promises superb highlights for investors.
Since NFTs are based on a blockchain distributed ledger, every asset leaves a transactional track from its creation to its last transfer or conversion. After the initial sale, its creator can continue receiving royalties in what’s known as the primary and secondary NFT market. Fueled by increasing technology and the Internet of Things, IoT, product tokenization is bound to reach even the slow-growing economies through globalization.
As of 2021, What Asset Scams Should an NFT Investor Watch Out For in 2022?
While the scarcity of an item doesn’t necessarily guarantee its value, a significant setback of NFTs is that anyone can tokenize a product. Fraud is also a potential element going into 2022, seeing as it’s a segment where pseudonyms are commonplace, which doesn’t engender trust. Several scams have already crept into the market, such as creating fake stores that copy content and sell creations that don’t exist.
Counterfeiters and impersonators aside, hackers are prolifically swiping NFTs in alleged phishing scams from marketplaces. Users routinely report unauthorized transactions and the disappearance of their NFT assets, such as the Metamask loss of half a million dollars last fall. By the end of 2021, the sector experienced a market slump with trading volumes down as fraud took a toll.
The start of 2022 saw a slow start to NFT investments, attributed to the growing pains and bad actors executing high-profile scams. Above that, regulatory agencies are yet to crack down on scams, undermining most investors’ trust to put money on decentralized autonomous assets. Several of these negatives to watch out for include;
Rug Pull
Rug pulls happen when an NFT is promoted to solicit public investment, and then the creator, startup, or influencer disappears with the cash. They entice investors by launching on reputable marketplace platforms or claiming celebrity involvement before suddenly stopping on updating the project. Last year, almost $3 billion was lost to these schemes, with one of the most notorious being the Squid Game rug pull.
As a potential NFT investor, you should be aware of the more and less innovative scams despite their scale. Besides the much-publicized projects, smaller asset offerings also have scammers doing the rug pull multiple times.
Wash Trading
Some NFTs are selling for millions of dollars, while others appear to gather digital dust, which can be frustrating for potential investors. Others appear to skyrocket in value for no discernible reason, often after a flurry of trade activities. It’s a century-old scheme known as wash trading, where buyers and sellers conspire to artificially inflate an asset’s value, faking significant external interest.
Sometimes, you’ll find that the buyer and seller are the same entity since some prominent crypto wallets don’t require identity verification. That makes it easy to make an NFT asset appear more valuable than it is, usually by creating multiple accounts and trading it back and forth.
The practice was banned in 1936 by the Commodity Exchange Act, and you’re prohibited from deducting losses due to ‘wash trading’ from returns by the IRS. Last year, these grifters made profits by raking in $9 million from such scams in over 260 wash trade cases.
Pump and Dump
They are a long-standing staple of penny stock scams and involve inflating an asset’s value artificially by misrepresenting investor demands or making misleading statements. Pump and dump schemes target small and obscure NFTs, luring investors into getting in early on assets claiming they could later have significant potential.
Last year, crypto and NFT investors lost millions to pump and dump scams, despite the federal government’s prohibition of similarly manipulative market schemes. Others allege celebrity involvement, only for an investor to discover the promoters have been paid when the assets’ value crumbled.
What Are the Best NFT Investments to Follow In 2022?
It’s undeniable that there was exponential NFT market growth in 2021, and investors capitalized on the trend of owning digital assets. Thanks to their potential for value increase and mainstream appeal, some NFTs are worth following for an investor in 2022. Such trends don’t show signs of slowing down, and an abundance of new creations have proven themselves as veritable investments.
You can gain deeper insight by following these NFT creations, considered prized assets, since they allow buying and selling safely and with low fees. These include;
Lucky Block’s Platinum Rollers Club Collection’s NFTs
One of the most investable NFTs to consider is the platinum rollers club collection by Lucky Block, one of the best upcoming altcoins for 2022. With their innovative use of unique tokenomics, this development team releases ten thousand NFT collectibles, each one providing an investor with benefits. One of these advantages is that each asset acts as a raffle ticket to a daily draw that runs separately from this platform’s crypto lottery draws.
Every day, one lucky NFT holder wins 2% of the main jackpot draw, a jackpot estimated to total $10,000 on average based on Lucky Blocks’ ticket volume projections and user base. The Platinum Rollers Club collection dropped in March 2022 with NFTs minted for $1,500 and containing 24 rare edition assets.
Bored Ape Yacht Club
Investors ensured that the Bored Ape Yacht Club drops didn’t miss their NFT investment calendars, a 10,000 collection representing Bored Apes. These digital art assets have garnered incredible attention from high-rolling collectors worldwide. Besides ownership of the artwork, holders gain access to an exclusive yacht club which grants you impressive benefits, including an entrepreneur’s platform on Discord.
The creator of these NFTs is Yuga Labs, valued at $5 billion, and which has acquired intellectual rights to other collections from Larva Labs. You can purchase Bored Apes through OpenSea, giving you initial access to additional NFT drops. Although these assets are highly-priced, they’re the best tokens to invest in, mainly due to their popular appeal.
CryptoPunks
A collection launched in 2017, the CryptoPunks NFTs is one of the oldest projects around and whose price rocketed in 2021. It comprises 10,000-pixel images hosted on the Ethereum Blockchain, and each Punk has its unique aesthetic characteristics. Much of the asset’s value is derived from how long they’ve been available rather than visual appeal.
The CryptoPunks collection has garnered interest from celebrities, including high-profile actors to famous musicians, each having their own unique Punk. These assets command high price points, and with floor prices at $200,000, the most expensive sold for $11.75 million last year.
Pudgy Penguins
Pudgy Penguins is another of the best NFT assets to buy into for 2022, a collection featuring over 8000 NFTs that detail a cartoon penguin depicted in characteristic arrays. Each penguin is unique, some rarer than others, and they’ve also become popular with high net worth investors, adding to their appeal.
Currently, the floor price for a pudgy penguin NFT is more than $4,000, which means they’re within an average investor’s range. Incredibly, selling prices for these assets have exceeded the $460,000 mark despite the founders being voted out for not meeting goals. The creators had promised a native token and game for the NFTs, but as of January 2022, none had materialized.
Conclusion
When looking at the perspective of NFT investment in 2022, consider the asset collection’s creator, price points, and any additional features or benefits. Plan your purchase with the best wallet for storage regarding security, access, and gas fees. With the expansion of the metaverse and Blockchain gaming, consider alternative networks against congested marketplaces but don’t disregard any hype or celebrity endorsements.