The number of celebrities, brands and artists that hopped on the NFT bandwagon was bound to cause supply and demand issues, the VeeFriends creator says.
Popular entrepreneur and NFT proponent Gary Vaynerchuck — also known as Gary Vee — has argued that oversupply, greed and subpar projects are the main reasons the NFT market fell so hard over the past year.
On Dec. 12, Vaynerchuck used Twitter to highlight his latest blog post, which explores the NFT sector's current issues and where he thinks it's headed next year.
Hope this article can help some of you, the feedback has been humbling …. Why I Said 97-99% of NFTs Would Go to Zero - Gary Vaynerchuk https://t.co/BmhO7OUGdH
— Gary Vaynerchuk (@garyvee) December 11, 2022
Commenting on the state of the market, Vaynerchuck emphasized that there has been a significant amount of fear, uncertainty and doubt (FUD) from traditional media as well as social media this year, with both generally highlighting issues such as dwindling trading volumes and plummeting floor prices.
“The truth is, if you’ve been paying attention, you know what’s really happening here — and if you’re like me, you’re not surprised," argued Vaynerchuck.
He pointed back to a prediction he made a year prior, in which he argued that “98-99% of NFT projects” that gained traction during the NFT boom in 2021 would end up being bad investments or would “go to zero.”
Problems with NFTs
Explaining this prediction, Vaynerchuck highlighted three major issues holding back the market — oversupply, short-term greed and poor operators.
In terms of oversupply, Vaynerchuck argued that the large number of “celebrities, influencers, sports leagues, big brands and individual artists” who jumped on the bandwagon last year was bound to cause supply and demand issues.
“Some have been amazing projects led by true operators who are focused on delivering value to their communities — most are not,” he wrote, adding that:
“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.”
In regards to short-term greed, Vaynerchuck argued that the industry has been hampered by too many people rushing to make a quick buck from launching projects or trading NFTs, resulting in losses to scams and projects with poor fundamentals imploding.
“Everyone’s way too selfish, way too fast, and lacking thoughtfulness. This is a marathon, but everyone’s treating it like a micro sprint and a gold rush, and that’s why most will lose,” he wrote.
In June, blockchain monitoring software company DEXterlab polled more than 1,300 people on Twitter about their NFT buying habits during the period fromlate May to early June. It found that while 64.3% of its respondents said they bought NFTs "to make money," fewer than 42% had made a profit at the time of the poll.
Meanwhile, on the subject of bad projects, Vaynerchuck suggested that as anyone can simply launch an NFT project “there’s now a huge number of people with no real knowledge of things like business, long-term community building, culture, day-to-day operating of a staff, and creating demand.”
Where are NFTs going in 2023
Looking forward into 2023, Vaynerchuck argued that there's unlikely to be another market boom like that of 2021, particularly as he doesn’t see the “macroeconomic landscape” turning bullish anytime soon.
Additionally, Vaynerchuck likened the crypto and NFT sector to the internet boom of the late 1990s and early 2000s, when countless companies crumbled while the strongest rose to dominance.
“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 jumped into NFTs back in early 2021 and went on to launch his debut project VeeFriends in May of that year. He's invested in a number of projects since then. According to data from CryptoSlam, VeeFriends is the 20th-ranked NFT collection in terms of all time sales volume, at $241.8 million.
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