Oversupply, greed, and bad projects stall NFT market

Key points: 

• Gary Vaynerchuck believes that oversupply, greed, and underperforming projects are the main reasons why the NFT market has plummeted over the past year.
• Vaynerchuck highlighted that this year there has been a significant level of fear, uncertainty, and FUD in both traditional and social media.
• “The demand has not and will not be able to keep up with that extraordinary level of supply, and any time that happens, there’s a bubble waiting to burst.”
• Vaynerchuck believes that the industry is being hindered by too many people rushing to make a quick buck by launching projects or trading NFTs, leading to scam losses and the collapse of projects with poor fundamentals.
• Looking ahead to 2023, Vaynerchuck sees a repeat of the market exuberance of 2021 as unlikely, not least because he doesn't think the "macroeconomic landscape" will turn bullish anytime soon.

Popular entrepreneur and NFT advocate Gary Vaynerchuck, aka Gary Vee, believes that oversupply, greed, and underperforming projects are the main reasons why the NFT market has plummeted over the past year.

On Dec. 12, Vaynerchuck took to Twitter to highlight his latest blog post, which explores issues currently facing the NFT industry and where he sees it headed next year.

Commenting on the state of the market, Vaynerchuck highlighted that this year there has been a significant level of fear, uncertainty, and doubt (FUD) in both traditional and social media, with both highlighting sweeping issues such as reduced trading volumes and falling stock prices.

"The truth is, if you've been paying attention, you know what's going on here -- and if you're anything like me, you're not surprised," Vaynerchuck argued.

He cites a prediction he made a year ago in which he believed that “98-99% of NFT projects” that gained momentum during the NFT boom in 2021 will end up being bad investments or going “to zero.”

The problem with NFTs

In explaining the forecast, Vaynerchuck highlighted three key issues holding the market back — oversupply, short-term greed, and poor operators.

As for the oversupply, Vaynerchuck believes that the sheer number of "celebrities, influencers, sports leagues, big brands and individual artists" that flooded the bandwagon last year will inevitably lead to supply and demand issues.

“Some projects are led by real operators focused on bringing value to their communities — most are not,” he wrote, adding:

“The demand has not and will not be able to keep up with that extraordinary level of supply, and any time that happens, there’s a bubble waiting to burst.”

Regarding short-term greed, Vaynerchuck believes that the industry is being hindered by too many people rushing to make a quick buck by launching projects or trading NFTs, leading to scam losses and the collapse of projects with poor fundamentals.

"Everyone is too selfish, too fast, and inconsiderate. It's a marathon, but everyone treats it like a sprint and a gold rush, which is why most people lose," he wrote.

In June, blockchain monitoring software company DEXterlab surveyed more than 1,300 people on Twitter about their NFT buying habits from late May to early June. The survey found that while 64.3% of respondents said they bought NFTs to “make money,” just under 42% made a profit during the survey period.

At the same time, regarding bad projects, Vaynerchuck said that because anyone can easily start an NFT project, “a lot of people now don’t really understand things like economics, long-term community building, culture, day-to-day work. Employee operations and demand creation. "

Where will NFT go in 2023?

Looking ahead to 2023, Vaynerchuck sees a repeat of the market exuberance of 2021 as unlikely, not least because he doesn't think the "macroeconomic landscape" will turn bullish anytime soon.

Additionally, Vaynerchuck compared the cryptocurrency and NFT industry to the dot-com boom of the late 1990s and early 2000s, when countless companies failed and the most powerful rose to dominate.

“Due to a ridiculous amount of supply, many projects will crash and go to zero like Pets.com, but there will be some – that 1-3% of projects – that will become the Amazons and the eBays. The key is… how many of you are willing to do the homework it takes to make smart investments?”

Vaynerchuck started dabbling in NFTs in early 2021, launching his first project, VeeFriends, in May of the same year. Since then, he has invested in many projects. According to CryptoSlam, VeeFriends ranked the 20th NFT series with $241.8 million in sales.