What’s a Non-Fungible Token (“NFT”)

  • A digital certificate of authenticity that runs on blockchain
  • Class of cryptocurrency where each item is entirely unique
  • Useless as currency, used for digital art or collectables

An auction that started at $100, ended up selling for $69,346,259…wait that’s not all of it…. the first purely digital artwork offered at Christie’s AND purchased using Ethereum!  So we have just seen close to US70 million paid for a jpeg…

Mike Winkelmann, an artist known as Beeple, sold an image titled “EVERYDAYS: The FRIST 5000 DAYS”, a collage of 5000 daily posts (13-and-a-half years in the making).  This led to interest in NFTs (Nifties) rocketing in the space of a few hours.  Just as Reddit fuelled a GME run, Clubhouse – an invite only chat app with an obsession over NFTs – kickstarted interest in Beeple’s artwork.

 

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What’s the takeout from all of this?

Well, with some of us still scratching their heads on Bitcoin’s valuation/ permanence/ even creator, the safest deductions we can make out of this is that

1Digital art is here to stay:

Whatever business you’re in that results in a $69M paycheck, is highly likely to spread around corralling more players

2 Cryptocurrency dominance:

In May 2010 the first pizza purchased with BTCUSD and by 2023 digital wallets are expected to make up half of global eCommerce sales (according to Bakkt)

3 More disruption on the way:

A tradable financial product indexed to the value of a group of NTFs?

 

Bitcoin does not appear to have benefited from the NFT sale:

BTCUSD latest price action and outlook

 

Looking at the 4H chart, BTCUSD confirmed a double top around $58000 with $58115 as the highest close, surging higher as momentum indicators started flashing signs of exhaustion. The MACD along with the RSI have confirmed signs of strengthening bearish momentum with $55k as the next key support and line in the sand to direct Bitcoin’s next move.

A breach of the $55K key support and line in the sand favours further downside with the 50 period SMA at $52K (coinciding with the 200 period SMA on the hourly chart) as next target. While a failure to retrace below $55K will keep bullish momentum strong with the crypto eyeing $62400 as next new all-time high target.

However, the more products from artwork to pizza’s which can be bought with cryptocurrencies the more they will be adopted and used, and as they are a finite resource, the price should continue to go up -which it will need to do if we all want to own the work of Mr Winkelmann.

 

 

Karim Maalouf, FRM

Senior Market Analyst at SquaredFinancial

Karim started his career at a top bank in Credit Risk portfolio managementmoving onto Financial and Liquidity Risk, consulting, investment banking, building knowledge and trading experience along the way only to develop a passion for the fascinating world of trading and diverse trading strategies (high frequencyalgorithmic and day trading) benefiting from mentorship of leading industry experts. Karim believes that deep education is essential before risking any money. He joined Squared Research in 2018 as an Equity Analyst, but continues to trade on a discretionary basis, using successfully developed methodologies coupled with effective risk management and a winning psychology. Karim obtained a Bachelors’ Degree in Economics from the American University of Beirut (AUB) in 2011, is FRM© certified with the Global Association of Risk Professionals (GARP) since 2017, have successfully passed CFA (Chartered Financial Analyst) level I, and CMT (Chartered Market Technician) level II.

 

Disclaimer: This information is only for educational purposes and is not an investment recommendation. The information here has been created by SquaredFinancial. All examples and analysis used herein are of the personal opinions of SquaredFinancial. All examples and analysis are intended for these purposes and should not be considered as specific investment advice. The risk of loss in trading securities, options, futures, and forex can be substantial. Customers must consider all relevant risk factors including their own personal financial situation before trading.