During the depths of last year’s pandemic, as the market slid 35% from its highs, I predicted that we were headed for the mother of all bubbles.

At the time, the economy was temporarily closed, unemployment was nearly 15% and investors were dumping stocks.

The fear in the air was so thick you could cut it with a knife.

That article received pushback from readers.

Many investors were certain an economic meltdown was imminent. Calling for a bubble was totally going against the grain.

But I stuck to my guns.

Since the article was published in April 2020, the S&P 500 Index has rallied 80%.

Right now, there’s an even bigger bubble. And it’s happening in nonfungible tokens, or NFTs.

NFTs Can Represent Anything

I’ve written about this in the past few weeks. NFTs are crypto tokens that correspond with a unique digital property.

They’re the building blocks of the metaverse, and can represent anything digital — a song, video, work of art or even a piece of digital real estate.

Crypto enthusiasts have been scooping up NFTs and sharing them on social media as a way of not-so-humble bragging about their social status.

This is akin to purchasing luxury real-world items like expensive shoes or bags. (Thankfully, my wife is into neither.)

Recently, crypto took conspicuous consumption to a whole new level.

There are always signs in hindsight, and this might be one of them: Wealthy investors are paying hundreds of thousands of dollars for a limited edition of digital rocks.

Here’s the founder of the cryptocurrency Tron showing his recent purchase:

Tron Crypto founder tweet digital rock

Payments processor Visa also announced on Monday that it bought a CryptoPunk for nearly $150,000 in Ethereum.

visa buys cryptopunk nft for $150,000 ethereum

Let’s get something straight … I believe NFTs are in a bubble.

It’s clear that there’s too much demand chasing too little supply.

This Bubble Will Eventually Burst

As I wrote last week, popular NFT trading platform OpenSea has seen volumes skyrocket 76,240% this year.

Prices for individual projects like CryptoPunks and Bored Apes have risen over 1,000X in the past few years.

(Have you bought an NFT? You can let us know by answering this poll. We’ll post the results in a future Smart Profits Daily email.)

Like all bubbles, there’s a rush to create new supply right now. Eventually, the supply will overwhelm demand and lead to a sharp correction.

But I don’t see NFTs going away. They aren’t a fad. We can’t have the metaverse without NFTs.

A sharp correction in NFTs will lead to enormous buying opportunities, especially among the earlier, well-established generative art projects.

Regards,

Ian King cryptocurrency bitcoin expert at banyan hill publishing signature

Ian King

Editor, Strategic Fortunes