Non-Fungible Tokens (NFTs) have seen much activity lately, such as selling digital art and virtual real estate. Hence, NFTs have become an increasingly popular way to buy and sell digital assets.
However, the NFT market may be on the decline, as Fanatic, a UK-based digital Sports Merchandise company, claimed recently. The company sold 60% of its ownership in Candy Digital, a top NFT marketplace.
Fanatic, the sports company owned by Michael Rubin, suffered significantly due to the ongoing crypto bear market. According to CNBC, Galaxy Digital, a crypto investment group overseen by Mike Novogratz, will take over Fanatic’s Candy Digital shares.
Rubins emphasized the importance of collaboration within the NFT sector, claiming that it is unlikely to thrive as a single entity. He wrote, “in the past 12 months, it has been evident that NFTs are not capable of sustaining or generating profits as a “standalone” business.”
He declared that relinquishing his firm’s stake in Candy Digital “enabled us to guarantee that investors can reclaim the majority of their capital in cash or additional shares in Fanatic.”
Rubins explained further that the move would favor investors as more stability await the sector due to the collaboration with physical collectibles. “We believe digital products will be more valuable and useful when connected to physical collectibles, providing the ultimate experience for collectors,” he added.
The NFT Market’s Challenges
This move comes when the NFT market is facing some challenges as the crypto market downturn continues. With the proliferation of projects and the need for a clear market leader, it is becoming increasingly more work for investors to know where to put their money.
At the same time, the market is experiencing a wide range of issues, notably high transaction fees and greater regulatory scrutiny. Therefore, it is no surprise that Fanatic has chosen to cut its loss in the NFT marketplace.
In January 2022, the sports merchandise giant purchased Topps trading cards in a deal worth approximately $500 million. Additionally, it secured the rights to create trading cards for Major League Baseball, followed by Non-Fungible Tokens (NFTs) after Candy Digital’s launch the previous year.
The Sports merchandise company secured $100 million in funding in October 2021 at a valuation of $1.5 billion. However, the turbulence in the crypto sector in 2022 had an alarming toll on the NFT marketplace.
Daily sales fell to 15,000 from more than 100,000 in January 2022, according to data from the NFT market tracker, non-fungible.com. The sale of Fanatic’s stake in Candy Digital marks a significant shift for the company and the NFT market.