Ark Invest, one of the leading analysts in the crypto investment space, declared that the recent boom in non-fungible tokens might have a negative symbiotic effect on cryptocurrencies as NFTs are a high risk and illiquid asset class.
Though there are many market speculations that NFTs great market value and price at the moment, which is climaxing a total of $35 billion dollars and an hourly trading value set to be $232,482 dollars, is a sign that cryptocurrency and its related assets may not see a massive decline all at once, however, it has also been said that NFTs poses a great risk on many assets.
NFTs have achieved public dominance by being the first to integrate blockchain tech in 2021. Traders and individuals active in the non-fungible token market might have a pretty good crossover between the active crypto community and the active NFT ecosystem.
With this underlying relationship between cryptocurrencies and non-fungible tokens, Ark Invest seems to have his opinion regarding the resultant effect for cryptos as NFTs rise above the tide this first quarter of the year.
He recalls that NFTs particularly see a major upward projection in value during the bullish season, stating that assets that have a resemblance with non-fungible tokens seem to also do very well during this cycle taking LTC for example, the coin did very well in the market, receiving massive buying volume in 2013 even though Bitcoin was seen to be dropping that in value that period.
At the peak of Ethereum in the early quarter of December last year, alternative layer one chains also got a green light, as was noted by Burniske. As Ethereum entered the correction phase, the Alternate chains made their way in the upward trend, as confirmed through the technical analysis.
In 2017 the market began with about 10,000 digital works, built and signed up as separate assets mounting it on the Ethereum blockchain. The works were being traded for a minimal value until they began to spike exuberantly in the first quarter of 2021.
Burniske’s Technical Analysis
According to the technical analysis of both the illiquid and the liquid assets at the latter phase of the bullish market trends of the crypto space, it was confirmed by Burniske’s Theory that both small and growing alternative crypto assets as well as tokens suddenly were able to scale up in their values respectively while the more significant coins were seen still undergoing the correctional phase.
To confirm that Burniske’s theory isn’t precisely accurate is the quick market recovery sometime in September last summer. It is observed that the market value of the biggest cryptocurrency took quite a dip dive, to about $24,000 US dollars, just as the non-fungible tokens were seeing a high level of profitability as the investors and traders alike were feasting and feeding fat on it.
Though there is now a recent adjustment in the cryptocurrency market, more of its assets still seem to be trading at a reasonable market valuation.