In this month, an NFT Pet-Rock (image of a rock) was sold for over $200,000.
Meanwhile, the market capitalization of the meme coin Pepe (with an image of a cartoon frog) doubled in just a few weeks, and even the price of the FTT token, created by the bankrupt FTX, tripled over the last month in the hope that Sam Bankman-Fried's crypto exchange will rise from the dead.
Everywhere you look, there are signs that the FOMO (Fear of Missing Out) trend is slowly returning to the crypto industry.
The recent rise of "digital junk," as Bloomberg put it, started after almost two years of a crypto winter, when the value of thousands of questionable crypto projects fell (in some cases to zero). Aggressive actions by the Securities and Exchange Commission designated some digital coins as illegal and pushed many away from cryptocurrencies. Now it turns out that the "purge" was only temporary.
"As prices rise, investors feel they need to get involved," said Campbell Harvey, a finance professor at Duke University. "Many will violate rule number one in investing: understand what you're investing in. Many will also violate rule number two: putting their money in an undiversified bet on a single token."
Social media is once again filled with posts promoting meme coins. One such Memecoin was created earlier this year and saw a sharp price increase this month. Its brief official document, where warnings take up about as much space as explanations, notes that the token "does not have functions, utility, or intrinsic value, does not make promises or expectations of any financial profit, interest, or dividends."
"I guarantee there will be another altcoin frenzy cycle, and more people will get hurt," said Cory Klippsten, CEO of bitcoin service provider Swan.
Static images of rocks tied to Ethereum and Bitcoin blockchains are being sold again at incredible prices. Bitcoin Rock #75 was recently sold for almost three bitcoins, or approximately $112,900. The collections, like many others, are held by a small group of people. And, like most NFT collections, the rocks are not very liquid. Meanwhile, some projects are conducting NFT sales within digital gaming territories, even though many participants in previous projects got burned.
"It is important to note the current atmosphere, which can be called a mini bull market," said Sarah Gergelis, an analyst at DappRadar. "This environment has filled the NFT space with a new wave of enthusiasm and speculative investments, which can sometimes overhype prices of projects that might otherwise have limited long-term value."
TG Casino, specializing in offering anonymous cryptocurrency gambling games on Telegram, raised over $2 million in token presale.
Among the frenzy surrounding the latest "hot" tokens, some buyers ultimately fall victim to scammers when the coin creators disappear along with the liquidity. According to blockchain security auditor Hacken.io, in the third quarter, "rug pull" accounted for 65.1% of all types of cryptocurrency attacks.
"Optimists see a thaw in the crypto winter and even signs of economic recovery," said crypto investor Aaron Brown. "If this is indeed an early crypto spring, good new ideas should distract from the junk. If not, it needs to return to obscurity."
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