Do Crypto Prices Affect NFTs?

cnbctv18.com:

The non-fungible token (NFT), a relatively unknown concept until recently, has now become ubiquitous. Spending on the digital asset jumped to nearly $41 billion at the end of 2021--from just $1 billion in 2020--per a report by blockchain specialist Chainalysis.

NFTs transform art, music, and even sports, and provide creators the option to monetise their digital artwork.Last year, the NFT market saw sales at eye-popping levels. A digital photo collage by South Carolina-based graphic designer Mike Winkelmann, known to the art world as ‘Beeple’, for example, sold for $69.3 million, making it one of the biggest NFT sales to date.The value of NFTs depends on various factors--their scarcity, the demand for the artwork or sometimes even the artist, and the prices of the underlying cryptocurrency used.

Many online marketplaces that sell NFTs are powered by a blockchain. Currently, the Ethereum blockchain powers the most popular ones.

So, if you are looking to buy or sell NFTs through one of the popular marketplaces, you will most likely need ethereum's native cryptocurrency, ether, for the transaction.But what is interesting is that while cryptocurrencies are extremely volatile, not all NFTs track the movement of their underlying crypto. For instance, despite the ongoing correction in crypto markets, NFT marketplace OpenSea has recorded $2.3 billion in NFT volume in January so far, on pace to break its monthly volume record if volumes continue.Discussing last weekend’s crypto selloff with Yahoo Finance, Mason Nystrom, senior research analyst at crypto analytics firm Messari explained this anomaly.