Is Melania Trump’s NFT a Sell Signal for Crypto?

Is Melania Trump’s NFT a Sell Signal for Crypto?

Lofty prices for parody coins. Celebrity-driven commercials for trading platforms. A frenzy over non-fungible tokens that has enticed famous names including former first lady Melania Trump. Even after a pullback in the past month, the cryptocurrency market remains full of frothy behavior.

Yet lately, signs are mounting that crypto could be headed for a pronounced selloff. And the Federal Reserve’s hawkish pivot on Wednesday may just accelerate the process.

One telling signal is that trading volumes for both crypto and NFTs are declining after parabolic surges. In their latest reported quarters, crypto-focused Block Inc., formerly known as Square, and Coinbase Global Inc. both reported digital currency trading revenue significantly below market expectations as transactions on their platforms slowed. Meanwhile, the aggregate value of NFTs traded on marketplaces has fallen since its August highs.

“Greater fool” theory suggests that it’s fine to buy overvalued assets as long as it will be possible to sell them for an even higher price. But diminishing trading activity suggests crypto markets are running out of greater fools. Since the vast majority of cryptocurrencies and NFTs have no real-world utility and are used primarily for speculative trading, a loss of confidence among investors could quickly gather steam.

The US government