Cryptocurrencies and NFTs can help investors protect their eroding purchasing power

Cryptocurrencies and non-fungible tokens (NFTs) can help investors protect their eroding purchasing power during an era of exponential currency debasement

Non-fungible tokens (NFTs) and cryptocurrencies can help investors protect their purchasing power during an era of exponential currency debasement, according to analysts and industry leaders.

“You don’t own enough crypto. When you do, you don’t own enough NFT’s, as art is upstream of wealth. Both will never be this cheap again,” said Raoul Pal, founder and CEO of Global Macro Investor.

“The single best long term store of wealth I know and you get to buy it before network effects kick in.”

NFTs are becoming an increasingly important investment in the “world of the exponential age and currency debasement,” he added in another post.

“There is some validity to the statement that NFTs, and in extension art, become a vehicle for the wealthy once a certain level of wealth is reached,” agreed Nicolai Sondergaard, research analyst at Nansen.

Speaking to Cointelegraph, Sondergaard said it’s a “natural move” for asset diversification as traders move down the wealth curve. For traders and investors further up, NFTs are partially about speculating on future returns.

NFTs are also benefitting from the allure of strong communities, which may interest those less interested in wealth generation, he noted.

Discussing the potential for NFT art to serve as a valuable asset class, Anndy Lian, author of "The Non-Fungible Revolution," and intergovernmental blockchain expert, said it may see a resurgence as digital ownership gains acceptance among younger, tech-savvy cohorts.

However, he added that for art NFTs to truly blossom, the blockchain networks must improve in terms of scalability and throughput to instill confidence in the new generation of investors.

"Such an endeavor requires collaboration among industry leaders, governmental bodies, and the community at large to create a shared vision for the future of finance and technology," Lian said.

If collections manage to move past the speculative fervor and instead focus on cultural relevance, they might pique the interest of older generations as well, he explained.

"For instance, a renowned NFT art collection could tie up with a historical museum to integrate famous artifacts or exhibits into their NFTs, thereby imbuing them with cultural significance and historical context," Lian suggested.

Ultimately, he said that NFT art must transcend hype, anchoring value in cultural significance or utility. Only then will it truly capture the imagination of diverse generations of collectors, forming a legacy that stands the test of time.

Some digital artists have already managed to amass fortunes through NFTs. Notably, Mike Winkelmann, also known as Beeple, sold his "Everydays: The First 5000 Days" NFT artwork for a record-breaking $69 million at a Christie’s auction in March 2021.

The largest NFT collections, on the other hand, seem to have run out of steam, failing to recover toward their 2021 highs.

CryptoPunks, the largest NFT collection by market capitalization, is currently being traded at a floor price of 46 Ether (ETH), 59% down from its peak of 113.9 ETH, reached on Oct. 9, 2021, NFTpricefloor data shows.

The NFT market is expected to see a return to form in early 2026, after the profits from Bitcoin’s (BTC) cycle top start rotating into other digital assets, according to Yehudah Petscher, strategist at CryptoSlam NFT data platform and SlamAI.

"That likely puts the peak of the NFT market in Q1 2026, but don't expect a repeat of the 21/22 euphoria that we saw in NFTs," Petscher said.

"We're likely an entire cycle away from NFTs having a parabolic run."

However, the previous NFT bull market was driven largely by metaverse speculation and wealthy traders, both of which are mostly absent in the current cycle, Petscher noted.