Cryptocurrencies, blockchain, NFT and new trends

NFT legend Punk6529: NFTs are a bad investment with ‘breathtaking’ volatility

The Block

Quick Take

  • Crypto thought leader Punk6529 weighs in on NFTs, calling them “cultural objects” that mostly will not maintain long-term financial value.
  • Punk6529’s own NFT collection has generated more than $24 million in trading volume but he calls the market volatile.

Pseudonymous crypto legend Punk6529 is famously represented on Twitter by a CryptoPunk NFT and has a collection that has generated about $24 million in trading.

But that doesn’t mean he thinks investing in non-fungible tokens is a good idea.

“The overwhelming majority of NFTs … will not manage to maintain financial value,” Punk6529 said during a recent appearance on The Scoop podcast with Frank Chaparro. “Someday we might discover that like 90% of today’s collections are dead and illiquid and nobody wants them.”

Punk6529’s comments coincide with an NFT market that is struggling to rebound after a bull run came to a screeching halt and trading volumes tanked by more than 90%. What blue-chip collections have managed to maintain value — Bored Ape Yacht Club, Doodles and Azuki to name a few — are in the process of expanding their reach by pursuing other interests like video games, merchandising and content creation.

Although skeptical of the NFT market from an investment perspective, Punk6529 said that they definitely can serve a purpose.

‘Consumer application’

“NFTs are crypto’s first true consumer application,” Punk6529 said. He first started buying NFTs in 2017 and then later purchased “a completely irresponsible number” of them around 2020. He takes his name from the CryptoPunk NFT that doubles as his profile picture on Twitter.

But acquiring NFTs for investment purposes is now largely a “misguided” notion, he said. They are instead, primarily, “cultural objects” and people should spend only part of their disposable income on the digital assets.

“The volatility of NFTs is breathtaking,” Punk6529 said. “You should buy them for the same reasons you buy almost any other consumer product in your life.”

Punk6529 also has his own NFT collection called The Memes. The collection’s floor price is about $300 and in total has generated more than $24 million in trading volume.