Will NFTs come back or crash in 2025?

by
Victoria d’Este

Posted: Jan 21, 2025 1:14 PM Updated: Jan 21, 2025 1:15 PM

by well

Correction and fact check date: January 21, 2025, 1:14 p.m.

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There has been a lot of change in the non-fungible token (NFT) space over the past few years. NFTs have been everywhere in 2021. Not only have NFTs become popular, but the prices of some NFTs have reached millions of dollars. However, many people are starting to wonder if NFTs will still have value as 2025 begins.

Let’s see.

NFT market

After hitting its high point in 2022, the NFT market became a hot topic. Some sources estimate that market revenues will reach approximately $36.1 billion in 2023, and are expected to surge to over $217 billion by 2032.

Similarly, another source expects the NFT market to grow at a CAGR of 30.3% from 2024 to 2029, reaching $84 billion last year.

It’s not easy, out of sheer optimism or sheer logical reasoning, to come up with such big numbers for a market that has seen so much turmoil in recent years, especially in 2021.

2021 crash

Since most NFTs have been driven by speculation and excitement during the bubble period rather than their intrinsic value, these tokens have started to lose steam after reaching highs in 2021. These expensive assets immediately lost all appeal and value when the market began to slump.

During that time, most investors did not know about NFTs and relied on word of mouth to enter the market for these new tokens. Cryptocurrencies such as Bitcoin, Ethereum, and DOGE have reached new heights in 2021, with investors fascinated by anything that uses blockchain technology.

However, the craze did not last and the prices of these tokens plummeted. Lastly, NFTs are just nostalgic digital collectibles with no practical use. That’s why NFTs aren’t attractive to more people. It has no real purpose, at least so far.

NFT outlook in 2025

Even as markets slow down, the technologies and ideas that underpin them remain important, and experts predict the industry will mature beyond its initial excitement.

One potential reason for this is the rise of Web3, especially in the gaming sector. Starting in 2024, the NFT gaming market is expected to expand at a compound annual growth rate (CAGR) of 14.84%, reaching $942 billion by 2029. This forecast shows that the Web3 gaming industry has a lot of untapped economic potential, which could lead to more people using it and investing in it. In NFTs.

But beyond that, there are several drivers behind the potential resurgence of NFTs.

New technology integration

The industry has grown significantly through the combination of NFT, AI, AR, and VR. Two examples are:

• AI-powered NFTs: Creators are increasingly leveraging AI to build NFTs that can take on a life of their own, evolving in response to user input.
• Metaverse integration: Many networks have grown to now include NFT-based properties, avatars, and treasures. One example is sandboxes.

Find usefulness in real life

Now NFTs can be used for more than just digital artwork and collectibles. By 2025, they have discovered practical uses for:

• Digital tickets: More and more events and concerts are turning to NFTs, a secure digital ticketing system.
• Video Games: The next generation of peer-to-peer games will provide players with NFTs that have practical, in-game value.

Increased legitimacy

Governments and regulators are moving to address issues related to fraud and transparency. Important developments include:

• Better safety for buyers: Anti-fraud safeguards are built into the regulatory framework to ensure that the NFT market can trade freely.
• General perception: NFTs have gained public legitimacy through partnerships with big names like Nike and Starbucks.

CryptoThink analyst Sarah Kim recently pointed out that NFTs in 2025 will not be just a fad. It symbolizes the “future of ownership” and digital engagement.

A few obstacles along the way

Despite renewed optimism about the market and promises from a cryptocurrency-friendly U.S. administration, the NFT market still has major hurdles to clear.

Implied Volatility

No one can dispute the fact that the NFT market has experienced tremendous value fluctuations with sudden surges and sharp declines.

In recent years, many researchers have noted that NFTs have the highest average volatility, with one source estimating the volatility to be between 20% and 90%. Such spikes in volatility may occur in the future.

Speculators love this dynamism, but constant volatility scares investors seeking steady returns over the long term. The challenge for the field is to find a happy middle ground between novelty and long-term viability.

Intellectual property issues

Do you know what you get when you purchase an NFT? Does this also affect the base picture in addition to the token? Fair use, copyright, and licensing have all been the source of many misunderstandings.

There have been cases where illegal art pieces were created as NFTs. This is still confusing for both artists and consumers, but it will become clearer as regulations become clearer.

mainstream adoption

Lastly, if NFTs remain confusing and difficult to utilize, they will never reach their full potential. It can be difficult to get started, and many people still don’t understand why digital items should enter a market based on speculative value.

Integrating blockchain-based technologies with Web2 (the existing Internet) is of utmost importance. The key to achieving widespread acceptance is simplifying the interface, providing more realistic use cases, and providing better information.

Can the NFT market revive in 2025?

It’s also likely that these tokens will see a renaissance in 2025, when the cryptocurrency market is expected to experience one of the biggest bull markets of all time. The token, which started out as a digital collectible, has recently expanded its potential uses to include gaming, real estate and tickets, all of which are expected to rise in price.

Additionally, more and more countries, such as the United States, are showing support for cryptocurrencies, NFTs, and blockchain. This can be important in attracting investors and sparking new ideas for the asset. Additionally, increased adoption of AI in cryptocurrencies could improve user experience and pricing.

About the author

Victoria is a writer covering a variety of technology topics, including Web3.0, AI, and cryptocurrency. Her extensive experience allows her to write insightful articles for a wider audience.

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Victoria d’Este

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