Analysts at Morgan Stanley have said that non fungible tokens (NFTs) could be the next area of concern in the cryptocurrency space following the collapse of Terra’s LUNA/USD stablecoin TerraUSD UST/USD.
What Happened: In a research note seen by Benzinga, the bank’s equity strategists led by Sheena Shah pointed to NFTs and digital land as sectors to watch considering the high degree of speculation involved in trading them.
“Hyped and leveraged areas of crypto, such as decentralized finance and crypto-backed stablecoins, are seeing mass liquidations, as it is becoming clearer that all the elevated prices were traded on speculation, with limited real user demand,” the analysts stated.
The report highlighted that 82% of the top 100 cryptocurrencies reached their peak price in the past year, but are down an average of 62% from their all-time high.
Dogecoin DOGE/USD, currently trading 87% lower than its all-time high, is also on this list and so is LUNA, which lost 99% of its value in the last week alone.
As many market participants are likely making losses now, there could be more forced liquidations, the note said.
“The related digital assets, such as NFTs and digital land had much speculation and inflows,” the analysts said, adding that “the reason for most to purchase these assets was an expectation that someone else would want to purchase at a higher USD price.”
Price Action: According to data from Benzinga Pro, the leading digital asset Bitcoin BTC/USD was at $30,264, down 0.23% over 24 hours.
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