When it comes to keeping up to date with the latest cryptocurrency trends, look no further than Frederick Munawa. What is perhaps most interesting about Mr. Munawa is that, unlike many other crypto analysts, this Canadian began his career as a journalist after obtaining an MBA in finance from the University of Toronto. This has enabled him to appreciate the latest macroeconomic trends while also being able to interpret important cryptocurrency market signals.
So, it is no surprise that his recent remarks about why NFTs have lost a considerable portion of their value has garnered a great deal of attention. Let's see why he believes that bearish NFT sentiment could have broader implications for the entire cryptocurrency marketplace.
What does Frederick Munawa have to say about non-fungible tokens (NFTs) in general? While he is intrigued by the overall concept, he still has a slight bone to pick when it comes to functionality.
"We need to remember that the majority of NFTs will never gain any type of appreciable value. Even if one happens to significantly rise, there's the question of finding a buyer within a market often defined by relatively low liquidity."
However, we need to keep in mind that Mr. Munawa is not necessarily throwing cold water on NFTs as a whole. He also believes that these unique tokens can act as excellent indicators when examining the larger cryptocurrency ecosystem. We asked him to provide a more in-depth explanation.
Many cryptocurrency analysts will use well-known technical indicators to monitor the current state of play. Candlestick charts, Bollinger bands, the Relative Strength Index, and simple moving averages are all commonly employed. As Mr. Munawa has already stated across his social media circles, he prefers to take things a step further.
"We need to remember that NFTs can often serve as yet another means to interpret cryptocurrency market conditions. For example, an increase in token demand could signal an uptick in cryptocurrency sentiment (and liquidity). On the contrary, bearish momentum may suggest that this very same market activity could be slowing."
In other words, he believes that there is a direct correlation between non-fungible tokens, and other well-known cryptocurrency assets such as Bitcoin, Ethereum, and Litecoin.
Mr. Munawa has painted a rather stark picture, and some readers may automatically assume that the bears are slated to take control of the cryptocurrency ecosystem if NFTs continue to lose value. However, this is only part of the equation.
NFTs have always been known for their volatility. Another issue is associated with countless would-be projects that never come to fruition. This is one of the reasons why meme coins are often meant to be used for entertainment purposes, as opposed to real-world investor opportunities. The hype has subsided, and investors are now seeing that many NFTs lack the real-world utility associated with major tokens that have been adopted on a much larger scale.
Frederick Munawa sums up the previous paragraph in a rather witty fashion:
"You might possess the most unique product in the world. If no one's willing to buy it, you can never expect to sell it. The NFT community has always been fickle in nature. This has turned off many serious investors, and only the so-called 'punters' remain."
We can now begin to see why Mr. Munawa has already been dubbed "The Blockchain Guy" by his fans across social media.
We asked Mr. Munawa if he believed that the recent slowdown witnessed across the NFT marketplace might signal the same for mainstream cryptocurrencies. He brought up two critical points:
● He believes that this current situation is due to investors seeking NFTs that offer a utilitarian edge, and avoiding speculative positions.
● He also feels that traders are simply becoming more interested in well-known tokens, and have begun to modify their strategies accordingly.
To put these observations another way, bearish NFT sentiment does not necessarily signify that we are in for troubling times across the blockchain. Mr. Munawa states that we will have to wait and see the medium-term outcome; a clear nod to his journalistic roots, and an approach that will certainly resonate with the majority of traders.
