Donald Trump’s entrance into the NFT world came at the worst possible moment.
The former president’s hyped-up “major announcement” turned out to be a set of digital trading cards for $99 a pop, sparking widespread mockery from late-night hosts to even some Trump loyalists like Michael Flynn and Steve Bannon.
But the worse news for Trump is that, by almost any metric, the NFT bubble has burst.
Non-fungible tokens are digtal art and collectibles that are typically bought with cryptocurrencies. NFT art and collectible collections exploded in popularity and value beginning in 2020. Digital cartoon apes and other NFT imagers became ubiquitous as celebrities hawked them on-air and on social media.
But the heyday seems to be over.
Total NFT volume last month was down 89% from its peak in January, according to CryptoSlam. Trading volume on NFT marketplace OpenSea is at its lowest since June 2021, according to Dune Analytics. A collector can now buy a Bored Ape Yacht Club NFT — the most famous collection in the space — for a measly $80,466, an 81% drop from its peak value.
NFTs have tumbled in value during the so-called crypto winter brought on by fading interest and overall chaos in the crypto markets. The dramatic fall of major crypto exchange FTX (and its founder Sam Bankman-Fried) has been the cap to a tumultuous year in the space, with the total market value of crypto drop more than 63%, according to Coinmarketcap.
The crypto winter is showing few signs of thawing as prices fall to new lows, and regulators and Congress now have crypto in their sights.
It bears noting, however, that despite the bad timing Trump’s NFT collection has shot to the top of NFT marketplace OpenSea’s ranking and has raked in more than $1.4 million since its launch. On the Trump Digital Trading Cards website, the Trump collection claims to be “sold out” and the floor price for a single card has risen to $177.99, according to analytics site CoinGecko.
It’s not clear how much Trump himself will take from those profits. The Trump Card Collection site includes a disclosure that says the Trump collection is “not owned, managed or controlled” by Trump or his companies and instead his likeness was licensed to “NFT INT LLC.” The LLC has no website and lists its address at a mall in Park City, Utah, next to an Asian restaurant and vape store.
Celebrity crypto endorsers are under particular scrutiny right now.
Earlier this month a class-action lawsuit was filed against celebrities including Jimmy Fallon, Justin Bieber and Serena Williams, accusing them of improperly promoting The Bored Ape Yacht Club NFT collection. “Celebrity promotions of cryptocurrencies are fraught with problems,” reads the complaint, which quoted an SEC statement from 2017 cautioning against such endorsements.
Tom Brady, Gisele Bundchen and Steph Curry were also recently sued for promoting FTX, and in October Kim Kardashian was fined $1.26 million by the Securities and Exchange Commission for “unlawfully touting” EthereumMax tokens.
Trump’s eleventh-hour NFT entrance mirrors another late attempt to jump on a market trend: special purpose acquisition companies (SPACs), which allow companies to go public without the regulatory burden that comes with a traditional initial public offering. SPACs boomed in 2020 with celebrities and investors piling in, but rising interest rates and a troubled stock market has led to a dramatic fall in SPAC value.
A SPAC called Digital World Acquisition Corp launched in October 2021, months after the SPAC boom’s peak, and has been attempting to merge with Trump’s social media company that own Truth Social. Trump’s entrance into the SPAC world came after the boom.
“When The Donald launched his SPAC in October 2021, the writing was already in blood on the wall for the SPAC bubble,” said hedge funder Benn Eifert of QVR Advisors. “He bought into a clear collapse.”