“The First Tweet” has had a dramatic fall in price—does this signal a crash in the NFT market?
If you follow the non-fungible token (NFT) space closely, you would know about the NFT of Jack Dorsey’s first tweet ever. Dorsey sold his tweet to crypto entrepreneur Sina Estavi back in 2021 and donated US$2.9 million earned from the sale to the nonprofit organization GiveDirectly’s Africa fund.
The tweet got its value from being a landmark moment in the social media platform’s history. After making the purchase, Estavi had remarked on Twitter that, “years later, people will realize the true value of this tweet, like the Mona Lisa painting.” But when Estavi decided to sell the tweet this year for US$48 million, CoinDesk broke the news that the highest bid he received was 0.09 ETH (equivalent to US$277 at the time of the bid). Although the BBC later clarified that the highest bid was US$6,200, it was nothing compared to what Estavi had bought the tweet for.
With so many NFT collections entering the market every day, the massive drop in the tweet’s value does leave one wondering about the future of the NFT space. Let’s take a look at why the NFT lost its value and what this means for the NFT market at large.
Signals of the loss in value of The First Tweet
Estavi’s untrustworthy image
We must point out that the loss in the tweet’s value isn’t random at all. One of the reasons why the crypto community might not want to make a purchase from Estavi could be because of his problematic past. In May 2021, Estavi was arrested for destabilizing the Iranian economy. Post his arrest, his Malaysia-based crypto exchange Cryptoland was shut down, which left its users without their holdings. Another statement by Israel’s Crime Investigation Center from around the same time revealed that executives from Estavi’s blockchain-based firm Bridge Oracle had been arrested as well. All of this culminated in a crash in Bridge Oracle’s BSG token.
Right before announcing the sale of The First Tweet, Estavi offered to let the investors of his Bridge Oracle Project switch to the Binance Smart Chain. This would make it possible to trade Bridge Oracle’s token (BSG token) on several crypto exchanges. The investors were skeptical of his intentions because he asked them to send him their phone numbers and some TRX tokens (tokens on the TRON crypto network) to verify their identities. These doubts could have trickled into the legitimacy of the NFT’s sale and led to a price crash.
The original purchase was inflated
Another reason why the NFT isn’t selling for as much as Estavi bought it for is that it was bought for far more than it was worth. When Dorsey first created the NFT in 2020, it garnered little to no attention. Estavi bought the NFT in 2021, when the NFT market had been picking up steam. On March 11, 2021 (two weeks before the tweet was purchased), Beeple’s EVERYDAYS: THE FIRST 5000 DAYS sold for US$69 million, heralding the beginning of the NFT hype. Moreover, around this time, NFT sales on OpenSea had jumped from US$8 million to US$150 million. Such exponential growth could have swayed Estavi’s mind and convinced him to purchase the tweet for its uniqueness.
Lack of utility
Finally, perhaps the main reason why the tweet no longer has the same value is because of its lack of utility. A lot of the NFTs that were popular in 2021, like Beeple’s EVERYDAYS: THE FIRST 5000 DAYS or even Cryptopunks, had little to no utility other than being collectibles.
The NFT market has come a long way since then. NFT collections, like Bored Apes, are popular for the commercial usage rights they provide and the community events they host. So, when you can actually get something meaningful from some other NFT projects, why would you choose to spend so much money on a collectible tweet? NFT collector Mitch Lacsamana questions the point of purchasing The First Tweet by saying, “Does Jack Dorsey take you out to dinner in Silicon Valley?…What is the real value proposition here? I think time has probably told us, and it’s probably nothing.”
Does this signal a larger trend in the NFT space?
Probably not. Despite the underwhelming performance of The First Tweet on the resale market, NFTs remain popular. The NFT market is expected to grow to US$147.24 billion by 2026. The lack of interest generated by The First Tweet does not point to a larger issue with the market; instead, it gives us some invaluable lessons.
It teaches us not to give in to the hype and pay too much for an asset and also encourages us to carefully analyze what we are purchasing before we buy an NFT. More and more projects continue to trickle into the market providing unique offerings, from offsetting carbon emissions to planting trees from sale profits. The market has evolved from people buying anything a celebrity might release to making choices based on its underlying utility.
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Header image courtesy of Wikimedia Commons and Jack Dorsey’s Twitter Handle