NFTs, also jokingly referred to as ‘JPEGs’ in the crypto community, have entered the mainstream.
Whether it’s at dinner conversations, celebrities using Ape NFTs as their Profile Picture on social media or big brands like Coca Cola launching NFT collectibles, NFTs are clearly the ‘flavor of the day’.
The chart above shows how searches for NFTs have surpassed searches for BTC and are well ahead of Blockchain and DeFi.
Why should this be of interest to traders? Because this has second and third order effects on the entire market.
Today, most NFTs are still powered by Ethereum. Buyers, artists and the general public are suddenly looking for coins and tokens with which they can buy their favorite NFT collections which in turn drives up crypto prices.
Other Layer 1 Blockchains such as Solana, Avalanche, Tezos and others are also seeing an emergence of NFT marketplaces and volume. Meanwhile, NFT-specific Layer 2 solutions like ImmutableX and entire Layer 1s like Flow have sprung up to provide Blockchains for specific use-cases focused on Gaming and NFTs.
On a higher level, NFTs seem to be the Trojan horse that helps to bring crypto and Blockchain technology mainstream. It’s all culture, fun and games and much more relatable for the general public than the dark corners and unfamiliar worlds of DeFi.
Clearly, ‘culture’ is one of the few forces in the world that can trump the power of financial markets. For traders and investors this opens many interesting questions. Should you try to pick winners and invest directly in NFT collections? Others might want to find NFT-infrastructure related projects or even explore tokenized NFTs that have tradeable tokens.
But maybe the ‘meta’-play in all of this is to focus on the Layer 1s that are best positioned to become the place on which NFTs live? Only time will tell.
In the meantime, JPEG Season might be yet another road through which ‘Crypto’ could detach itself from the broader financial markets and strengthen its position as an independent asset class with strong utility and upside.