The Rosen Report: NFT Flatlining

May 13, 2022
Eric Rosen

Opening Comments

I want to start by wishing all the mothers on my distribution a Happy Mother’s Day and have a great story about my wife, Jill. She was leaving NYC last week and tried Lyft and Uber to JFK from the Upper East Side. Lyft were over $200 to JFK, so my thrifty wife, took an old-fashioned yellow taxi for $70. This is one of the many reasons I love her, as my frugal ways are rubbing off. Why in the hell was Uber and Lyft so expensive?

Last summer, my readers were able to laugh at my pain with the travel for my son’s golf tournaments. Well, here we go again. Jack called me up the other day and said excitedly, “Dad, I got into a big tournament, the Future Masters, in Dothan, Alabama in late June."   All I heard was Dothan, Alabama in late June.  My choice of hotels are the La Quinta, Howard Johnson, Red Roof Inn, Motel 6, Motel 8, Holiday Inn.... We are also in Louisiana, Kentucky, and Tennessee at the exact wrong time of the year.

I get my blood drawn twice a year for a variety of tests. As mentioned, it is hard to get an appointment at the labs here. I found someone to come to your house to take your blood. He came on Friday and charged me $55 for the service. My first time about two years ago, it was $35, a 57% increase. No inflation to see here folks. He cited rising labor costs, gas prices and demand as the key drivers.

The auction of the Blue Marylin Monroe by Warhol which was the subject of my piece, “Never Ask Andy Warhol For Advice on Art,” will be auctioned Monday, May 9th at Christie’s. Some are now suggesting it will go for as high as $500mm. Remember, my father-in-law could have bought it for $100k or less in the mid 70s and turned it down because of advice from Warhol himself.

As readership grows, it is important that new readers know that you can contribute by sending me story ideas, feedback, topics or comments. Now, up to 25% of the stories I write about are ideas sent by readers. If you like what you read, pass it around, sign up friends and hit the “heart” button under my name. Given feedback, I have tried to make the Rosen Report more manageable and have cut it down by about 25-30% in word volume and added more pictures/charts.

  • Picture of the Day-Fishing Heating Up

  • NFT Flatlining

  • Quick Bites

    • Markets

    • Beaten Down Stocks

    • Oil/Natural Gas/Gasoline

    • IPO Crash in Volume/Proceeds

    • Jobs Data/Worker Productivity

    • Tipping Point?

    • Disinformation Governance Board Concerns

  • Other Headlines

  • Virus/Vaccine

    • Data

  • Real Estate

    • More Housing News Suggests Slowing

    • Los Angeles Commercial R/E Slides

Pictures of the Day

This is a great time of the year to fish in South Florida. The Blackfin Tuna and larger Mahi are making their way through these parts and they are very close to shore. From late April through May, the fishing tends to be solid and you can catch the tail-end of the Sailfish and Wahoo season along with the heavy migration of Cobia, Blackfin Tuna, Mahi, and Kingfish. Given my never-ending injuries, I have not gone much lately, but went for a quick trip with friends on Thursday. We got a nice King and lost a Sail near the boat. We also fought a large shark for 20 minutes. Note the teeth on the King. My friend Mark, caught a BIG Mahi the other day as well. These fish are all between 70-250 feet of water (very close to shore) this time of the year.

NFT Flatlining

I want to begin with the definition. A non-fungible token (NFT) is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. Each token is uniquely identifiable.

I have been quite vocal about the NFT art market and my belief that despite being blown away by the technology and potential applications, I felt the craze around worthless images was quite frankly, idiotic and akin to the tulip bulb craze. For this piece, I found two recent articles from the WSJ and Forbes and took excerpts from them in addition to my thoughts. Thank you to Jeff, an avid reader who pointed me to the WSJ article and another shout out to Val who gave some ideas to improve this section. The $69mm Beeple auction last March made me lose my mind as it is crap art. I would guess in a half dozen Rosen Reports, I was critical of the NFT art craze and witnessed it first hand at Art Basel Miami last year.

Prior to October 2020, the artist, Beeple (aka Mike Winkelmann) never sold a work for $100. In October 2020, Winkelmann sold his first series of NFTs, with a pair going for $66,666.66 each. In December 2020, he sold a series of works for $3.5 million total. With the crash, I wonder what the market value of this ugly piece is today. I have a feeling it would be closer to his pre-October prices of $100 than it is to $69mm. Remember, it is an NFT, not something you hang on your wall.

Just a few months ago, sales of NFTs, were hitting all-time highs according to the data website, NonFungible. But since then, the market has flat-lined with NFT sales down 92% as of this week, compared to last September, leaving many owners with digital assets worth a lot less than what they paid for them. The number of active wallets in the NFT market fell 88% to about 14,000 last week from a high of 119,000 in November. NFTs are bitcoin-like digital tokens that act like a certificate of ownership that live on a blockchain. The imbalance between supply and demand is also hurting the NFT market. As of the end of April, there have been 9.2 million NFTs sold, which were bought by 1.8 million people, the firm said. In September 2021, 225,000 NFTs sold every single day. Today that’s more like 19,000, according to NonFungible data shared by the Wall Street Journal. At the same time OpenSea, one of the largest NFT marketplaces, has seen daily app downloads plummet 94% from a spike that reached 180,000/day in January to around 20,000, according to Apptopia. App installs for Veve Collectibles, another NFT marketplace, are down a shocking 99% from a high of close to 18,000/day in November 2021.

An NFT of the first tweet from Twitter Inc. co-founder Jack Dorsey sold in March 2021 for $2.9 million to Sina Estavi, the chief executive of Malaysia-based blockchain company Bridge Oracle.  Earlier this year, Mr. Estavi put the NFT up for auction. He didn’t receive any bids above $14,000, and he didn’t accept the bids. I actually think this one is interesting…at $5,000.

Another NFT buyer purchased a Snoop Dog curated NFT, titled “Doggy #4292,” in early April for about $32,000 worth of the cryptocurrency ether. The NFT, an image of a green-skinned astronaut standing on what looks like a Hollywood Walk of Fame star, is now up for auction, with an asking price of $25.5 million. The highest current bid is for 0.0743 ether—about $200. Anyone who pays $25mm for this needs serious help. The $200 price seems about right and may be high.

Although I believe in the technology and am impressed with the NFT gaming implications (see my podcast at 40 minute mark around Axie Infinity and the implications), the NFT art angle makes no sense to me. I may never buy an NFT art picture in my life, but if I do, I can assure you it is for hundreds of dollars, not millions. Having said that, I am trying to sell an NFT of my hair. Although I believe it is better than Beeple’s $69mm work, I am willing to sell it for cheap, only 25% of that amount. Who wants to be the opening bidder for this one of a kind and instant classic? I call it, “Hairdo/HairDON’T.”

Quick Bites

  • The price action was incredibly severe following a strong day Wednesday before the violent moves down Thursday and Friday. I was critical of the Wednesday, post Fed, rally in my last piece. Famed investor and Carolina Panthers owner, David Tepper, chimed in Friday saying, “Central Banks have a little credibility problem. Taking the optionality of 75bps off the table was an unforced error that’s brought unhinged markets.” I could not have been more critical of the Fed and how they played their hand over the past year. They left the gas on the fire too long and now needed the 75bp raise and instead will likely go with multiple 50bps moves. My stock whisperer hedge fund manager friend and I spoke late Friday and he remained less constructive than I thought he would be. He feels there is more downside and there are funds which will not make it out of this. I believe some major funds are down big and may be down 50%+ now. You just can’t come back from that much of a hole in my opinion. I also heard of a large re-balance which one called, the “Biggest EFT Trade Ever.” The other thing of note is the VIX remains relatively low for the volatility (30). One reader sent me this: “The last time we saw this type of correlated stock/bond sell-off was Mar 18th 2020 (SPX -5.2%, 10Y +11bps) and Oct 9th 2008 (SPX -7.6%, 10Y +15bps). The difference? VIX at 76 in Mar20 and 64 in Oct08…vs...32 now. The calm in the vol market right now is pretty remarkable.” Despite starting the week with three positive sessions, the market ended down with a lot of volatility along the way. Below are the 5 day charts of S&P and Nasdaq for the week. Check out those swings largely driven by the move in rates (10 year +21bps on the week). Explaining one day does not do the week justice, so I showed 5 days in charts below. To me, the change in tact from the Fed is the story and going from Quantitative Easing to Tightening is the critical liquidity component. Although there is a great deal of uncertainty and things feel awful, I want to give a couple positives. The High Yield market and credit more broadly is down, but not imploding, and Friday, stocks bounced off the lows nicely. Feels like we have more room to fall, but believe there are starting to be some glimmers of opportunity in some of the beaten down names. The 10-Year closed at 3.14%. (1st time since 2018). 2s/10s on the Treasury curve are back out to 40bps after being negative in early April. Also of note, the 3month/10 year curve continues to move up and is 2.27%, a level not seen since 2015. Crypto correlations held up again and prices were smacked this week with BTC -6.4% to $36.1k and ETH -4.6% to $2.7k.




  • Despite the massive sell-off in global equities, concerns about global economic growth, the announcement of the release of the Strategic Petroleum Reserve (SPR) and the hate on the fossil fuel industry, oil is rising again. The EU’s phaseout of Russian oil and global supply concerns are pushing the market higher. Oil is now up 10% to ($110.6/barrel) since the sell-off after the SPR release was announced on 3/31/22. We are also going into peak driving season. For perspective, last year at this time, gas was $2.94/gallon and it is $4.28/gallon today. That is a 46% increase and if you go back to 2020, it is an increase of 140% from those depressed levels. Also of note is the price of natural gas which was incredibly volatile on Friday and traded as high as $8.99 before finishing at $8.06. Natural gas is now +122% YTD and 211% in 1 year. The final chart is US wholesale gasoline prices which closed Friday at record levels. Expect more pain at the pump just as peak driving season comes to fruition. I will say it again, I want energy independence. We will be reliant on fossil fuels for the foreseeable future. Augment the push of independence with incentives for alternatives and electric vehicles to help push cleaner energy sources to come to fruition faster. My first Model 3 Tesla 4 four years ago had a $12k government incentive on it, my 2nd, Model Y, a few months ago had no government incentives. Although they were different models, the 1st cost $42k and the second, $67k.

Natural Gas Prices for the past year. The -8.23% was on the day.

  • Some once high-flying stocks are crashing back to earth. I put together the chart below to show some moves. Interestingly, almost all peaked sometime in 2021. The high is the high close, not intraday high. I threw in Apple, MSFT, TSLA and Alphabet (A) as well for comparative purposes. I sorted by how much down from all-time high from worst to best. All are down at least 13% from highs. Some of these were major IPOs which rallied sharply initially. For perspective, the S&P is -13.5% and NASDAQ -22.4%. From the all-time highs, the S&P is -14.4% and NASDAQ -25.1%. Only three boxes are positive (Nvidia, Tesla & MSFT for 1 year).

  • I wanted to put the precipitous decline in Initial Public Offerings (IPOs) into perspective, and my massive research team (me), found this chart which is updated through 5/5/22. Last year, $142.4bn in proceeds were raised in 397 IPOs for the full year. This year, $3.4bn in proceeds were raised in 28 deals. For the 1st quarter of 2022, IPO proceeds fell 94% and dropped 79% with respect to number of deals done. This leads to more opportunities in private markets and also means states like CA, which benefited massively from the tech IPO boom, will now see materially lower tax receipts. Do I smell higher CA taxes to offset the lost revenue of IPOs and the flood of wealthy leaving the state?

  • Worker productivity fell to start 2022 at its fastest pace in nearly 75 years while labor costs soared as the U.S. struggled with surging Covid cases, the Bureau of Labor Statistics reported Thursday. Nonfarm productivity, a measure of output against hours worked, declined 7.5% from January through March, the biggest fall since the third quarter of 1947. At the same time, unit labor costs soared 11.6%, bringing the increase over the past four quarters to 7.2%, the biggest gain since the third quarter of 1982. The metric calculates how much employers pay workers in salary and benefits per unit of output. The economy added 428,000 jobs in April, more than expected, and wages grew by a solid 0.3%, or 5.5% year-over-year.

Other Headlines


The data continues to deteriorate with cases, hospitalizations and ICUs going the wrong way. All regions are seeing cases increase. The worst states from a case increase percent perspective are Missouri, Maine, Utah, Hawaii, Mississippi, South Dakota, Wyoming, Iowa, North Carolina, Louisiana, Wisconsin, West Virginia, Nevada, North Dakota, Minnesota, Rhode Island, Delaware and South Carolina which range from 78% to 319% case growth. The Deaths have been declining since early February and are basically flat at -1% over the prior two-week period. Depending on which source you use for data, the US death count ranges between 996k-1mm.

Real Estate

  • Zillow added fuel to the fire with comments on the real estate market from the CEO. The market is softening, full stop,” Chief Executive Officer Rich Barton  said in an interview. “I think the toughest macro lens is that inventory levels continue to plummet. Flat transactions would be a good year this year, and I don’t know if we’ll get there.”

  • I spent time with friends from Newmark who were kind enough to share a presentation on the market with me. I took 3 pages from the Los Angeles commercial market presentation which I found interesting. They are all self-explanatory. The last one shows how far we have to go to get people back into the office across the country. It seems approximately 42% are back in the office (end of March), while restaurants, TSA checkpoints and NBA games are back to 87-95% of pre-pandemic levels as of March 2022, but are up from those levels over the past month.

Eric Rosen
The Rosen Report
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