As the stock and crypto markets continue to underperform, venture capitalists are beginning to look towards NFTs to offer substantial returns to help with survival and growth
NFTs as the saving grace
2022 has been a sad year for investors globally because, after sustained periods of growth motivated by the pandemic and other factors, global markets are beginning to “correct,” leading to market cap losses for companies and investment losses for investors.
In the midst of the financial doom and gloom, NFTs have performed well, and in the last few weeks, we’ve witnessed record-setting developments from the NFT and Web3 space. With that in mind, it was only a matter of time before investors began looking toward NFTs for massive returns.
Usually, sophisticated investors get returns from a diversified portfolio, and when a couple of investments fail to pay dividends, they count on others to fill the void until the respective markets rebound.
As the stock and crypto markets continue to falter, more pressure is being put on NFTs to deliver and deliver big. Over the last few weeks, venture capitalists have taken actions that point to the fact that many investors are putting most of their hopes on NFTs to act as their saving grace during these perilous times.
Since NFTs began gaining popularity, this class of digital collectibles has had to deal with accusations of being nothing more than a cash grab for eager investors. With the amount of pressure that’s about to be put on NFT assets to improve in value, the next few months might be unpleasant for some of us.
Venture capitalists are going all-in
Andreesen Horowitz is one of the largest and most capitalized venture firms globally, and the firm is leading the charge of VCs directly investing in the NFT market. Naturally, Andreesen Horowitz isn’t alone; other venture capital firms are either executing plans to invest directly into the NFT market or are already executing their NFT investment strategies.
Paradigm is another major venture capital firm that has invested a great deal of its resources into the NFT space. When Andreesen Horowitz and Paradigm begin to increase their investments in a class of assets, the market takes notice because firms of this size are not known to make wayward financial and investment decisions often.
With that in mind, as venture capitalists throw millions of dollars into the NFT space buying digital land, digital collectibles, and digital arts, the market cannot overlook their actions, and these actions bring a considerable amount of questions.
Let’s consider the case of Punk6529, an unknown web character that has been able to raise around $75 million from around 350,000 devotees to invest in “blue chip” NFTs. Ophelia Brown of Blossom Capital shared the following about the company’s rationale behind investing in NFTs, “Whenever we ponder purchasing NFTs, it’s in accordance with our speculation procedure, which is contemplating putting resources into things that can possibly return many, numerous products of the asset.”