US$200,000 pet-rock NFT shows how crypto is falling back into FOMO

Earlier this month, an image of a pet stone sold for the equivalent of more than US$200,000 (RM936,900) on the non-fungible token market.

Meanwhile, the market capitalization of a cryptocurrency called Pepe – a meme coin based on a cartoon frog – doubled in just a few weeks. And even the price of the FTT token, which was created by the FTX exchange and currently has no real use, has tripled over the past month in hopes that Sam Bankman-Fried’s exchange will come back from the dead .

Everywhere you look, there are signs that the crypto market’s outlandish excesses — and the fear of missing out — are making an unlikely comeback. As expectations of an imminent approval of a Bitcoin spot exchange-traded fund push the oldest and largest cryptocurrency ever higher, the hype has also raised other boats – even those considered among the least navigable.

This latest rise in digital trash follows a nearly two-year crypto winter that saw the value of thousands of questionable projects plummet – some to almost zero – to the delight of critics and even some industry insiders . Aggressive actions by the Securities and Exchange Commission have marked some crypto coins as illegal and driven some crypto proponents away. It now appears that the cleanup was only temporary.

“As prices rise, investors on the margins think they have to get in,” said Campbell Harvey, a finance professor at Duke University. “Many of them will break rule number one of investing: understand what you are investing in. Many of them will also violate rule number two by putting their money in an undiversified bet on a single token .

Social networks are once again full of publications promoting the same corners. One of them is simply called Memecoin, which was created earlier this year and increased in value this month. Its short white paper, where warnings take up as much space as explanations, notes that the token “has no function, no utility and no intrinsic value, no promise or expectation of financial return, profit, interest or dividend”.

“Looking for a new theme to harvest customer money without any value – that’s the theme of non-Bitcoin cryptocurrencies,” Cory Klippsten, chief executive of Bitcoin service provider Swan, said in an interview. “I guarantee there will be another round of hype for alternative coins, and more people will get hurt.

Static images of rocks linked to the Ethereum and Bitcoin blockchains are once again selling for eye-popping prices. Bitcoin Rock #75 recently sold for almost three Bitcoins, or around US$112,900 (RM528,880). The collection, like many others, is held by a small group of people. And like most NFT collections, the rocks aren’t very liquid. Meanwhile, many projects are holding NFT land sales – effectively selling NFTs of properties in games’ digital territories – even though many participants in previous generation projects got burned.

“It is important to note the current climate of what could be described as a mini bull market,” said Sara Gherghelas, an analyst at researcher DappRadar. “This environment has infused the NFT space with a new wave of enthusiasm and speculative investment, which can sometimes inflate the prices of projects that otherwise might have limited long-term value.

TG Casino, focused on offering anonymous cryptocurrency gaming on Telegram, has raised over US$2 million (RM9.37 million) in a token presale, which includes the sale of NFTs to big players. Over the past few years, people’s investments in many token sales have crashed and burned.

Amid the frenzied rush for the latest hot token, some buyers end up being the so-called rug pulled — or duped by scams in which the coin’s creators disappear with the liquidity. In the third quarter, carpet attacks accounted for 65.1% of all types of crypto attacks, according to blockchain security auditor Hacken.io.

“Optimists see a thaw in the crypto winter, and even some green shoots,” said Aaron Brown, a crypto investor who writes for Bloomberg Opinion. “If we are truly in the early crypto spring, good new ideas should distract from the nonsense. Otherwise, trash should fade back into obscurity. –Bloomberg


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