4 Weeks of Outflows: Is Bitcoin Losing its Leadership to NFTs?

The year 2022 started with a bearish trend for the entire cryptocurrency market. One bad news followed another, and all major cryptocurrencies suffered significant outflows. Meanwhile, the emerging NFT market is experiencing unprecedented growth.

According to Coinshares' data, Bitcoin alone saw outflows of $73 million in 4 consecutive weeks. Meanwhile, the entire cryptocurrency market saw outflows of around $532 million, which is the highest number since 2018.

Among the possible reasons for such a decline are military actions in Kazakhstan, which has become the second largest crypto mining center after China imposed a ban on the industry. Of course, the general unrest caused significant problems for mining companies, affecting the entire industry.

Another reason is the possible increase in rates by the Federal Reserve. In addition, some countries, including Russia, are planning to increase regulatory pressure on the industry. By the way, Russia is now the third largest mining center after the USA and Kazakhstan. So if the government does indeed ban the industry, including mining activities, the market could go into an even deeper downtrend.

An inverse proportion

In the meantime, the beating of Bitcoin and other cryptos does not seem to be having an impact on the growing NFT market. As CoinIdol, a world blockchain news outlet, has previously reported, NFTs grew to $44 billion in 2021, and the start of 2022 has not slowed growth.

This huge growth has even attracted the attention of regulators. For example, the US Internal Revenue Service (IRS) is preparing to hunt down tax evaders who use NFTs. They also expect the number of tax evasion cases involving this innovation to increase significantly in 2022.

The nascent technology is attracting huge industry players. For example, Coinbase recently partnered with Mastercard to make the NFT market more accessible. With the development of the metaverse and the growing popularity of digital art and digital property, NFTs are likely to become "the optimal currency of the metaverse," according to Forbes.

The only thing currently holding back the growth of NFTs is the lack of awareness, knowledge and understanding. But if you think about it, the cryptocurrency market has also stumbled over the wall of ignorance. It took years for people to embrace it. The same could happen with NFTs at some point. But given the current pace of growth, adoption could take much less time.