Investors eagerly anticipate the next bull market in the crypto market, but caution is advised, particularly regarding non-fungible tokens (NFTs). Anders Helseth, the head of research at K33 Research, has recently warned against investing in NFTs in the approaching bull cycle, citing historical patterns and market dynamics.
Historically, Bitcoin (BTC) has been a dominant force in the cryptocurrency market, with its price movements significantly influencing the rest of the market. In previous bull cycles, Bitcoin typically led the initial charge, followed by a surge in various altcoins. For instance, in the 2013 bull market, Bitcoin’s value soared from about $145 to over $1,200, setting a precedent for subsequent bull markets. This pattern repeated in the following years, with Bitcoin consistently achieving significant gains before a broader market rally.
The NFT warning
Despite the usual trend of Bitcoin’s initial surge followed by altcoins, Helseth projects a different trajectory for NFTs in the next bull cycle. He anticipates that the initial bullish momentum in the market might lead to an increase in NFT wash-trading, creating a brief surge. However, he predicts this momentum will fizzle out quickly. Helseth bases his prediction on the reduced hype surrounding NFTs and their performance history. He asserts that being on a blockchain doesn’t guarantee value appreciation for NFTs and cautions against expecting significant returns from NFT trading.
Understanding the NFT market dynamics
Helseth’s viewpoint stems from an observation of previous market cycles. In past bull markets, a pattern emerged where Bitcoin led the way, followed by altcoins like Ethereum (ETH), meme coins, Ethereum-killers, and DeFi tokens. Notably, the NFT frenzy usually erupts just before the market turns bearish again. However, Helseth believes the allure of NFTs has faded, and the public, having learned from past experiences, is likely to be more cautious.
The key takeaway from Helseth’s analysis is the need for prudent investment strategies in the crypto market. While Bitcoin and altcoins have shown consistent patterns in bull markets, the NFT segment may not replicate its past performance. Investors are advised to approach the NFT market with caution, keeping in mind the potential for short-lived surges and the need for impeccable timing in trading.