A Potential Decoupling

The stock market and the crypto market have been highly correlated this year. It wasn’t supposed to be that way, but the numbers are the numbers.

However, while the financial markets are reacting to inflationary pressures and rate hikes, it looks like NFTs are holding their own. According to CoinMarketCap, over the past couple of months NFT sales volume has been relatively consistent – even though there seems to be less retail interest.

One explanation is that the bulk of the trading volume has come from a few big collections, such as Bored Ape Yacht Club, which are very expensive and the playground of the rich and famous. Another explanation (one I don’t care for, BTW) is that “art has traditionally been a good inflation hedge.” This explanation feels wrong to me, but I could be wrong.

I think a better explanation – if there even is an explanation – is that NFTs are fun. They drive interest in crypto by non-financial types. It’s a wider audience, and since NFT investors are not just putting dollars to work, they are less sensitive to market pressures. NFT “players” define success differently than pure financial investors do. Again, I could be wrong, but (by the numbers) the NFT market seems to be decoupling from crypto and equities. Time will tell. ​​

Author’s note: This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it.

About Shelly Palmer

Shelly Palmer is the Professor of Advanced Media in Residence at Syracuse University’s S.I. Newhouse School of Public Communications, co-founder of Metacademy, and the CEO of The Palmer Group, a consulting practice that helps Fortune 500 companies with technology, media and marketing. Named LinkedIn’s “Top Voice in Technology,” he covers tech and business for Good Day New York, is a regular commentator on CNN and CNBC and writes a popular daily business blog. He’s the Co-Host of the award-winning podcast Techstream with Shelly Palmer & Seth Everett and his latest book, Blockchain - Cryptocurrency, NFTs & Smart Contracts: An executive guide to the world of decentralized finance, is an Amazon #1 Bestseller. Follow @shellypalmer or visit shellypalmer.com.

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