After an astronomical bull run into the beginning of this year that was followed by an abrupt halt and 50% drop since April, crypto markets are at a fork in the road right now. Where they go next could inform us about how market conditions impact mainstream adoption via artists, creators and celebrities who have been taking a greater interest in the space.
To date, the market for nonfungible tokens (NFTs) and social tokens has been anecdotally correlated to the broader crypto market. As creators bring in more fans from outside of crypto, we’re seeing that correlation diminish, albeit with a small sample size. If Bitcoin (BTC) and Ether (ETH) don’t break out of their respective slumps and we do enter a bear market, there is a strong case to be made that the growth of the creator economy will insulate social tokens from the effects of the rest of the market.
Related: On the fence: If this is a crypto bear market, how long can it last?
The reality is that most creators’ audiences don’t care about the price of BTC or ETH — at least not yet. They are buying tokens to unlock exclusive token-gated benefits and to interact with their favorite artists and creators in new digital and physical ways.
As always, whether the next few months are bullish or bearish, both scenarios present unique opportunities for our industry. Whether the market pulls in new participants in good market conditions or shakes out the “weak hands” in a bear market, the near future presents a very pivotal time for the intersection of the creator and crypto economies.
NFTs cool down, weeding out the weak hands
Since the crypto bull market and NFT boom took off earlier this year, creators and celebrities have taken up a great deal of space alongside Bitcoin in the mainstream conversation about crypto. Today, the NFT market has cooled significantly, and fewer big-name celebrities are cranking out NFTs like we saw in March. Does this mean that NFTs were a passing trend, or will crypto change the way that celebrities and their fans interact in the long run?
There’s little doubt that a few celebrities have used crypto for easy endorsement money or to make a quick buck. But many of them are truly exploring how crypto can bring them closer to fans and using the technology to express themselves in new ways.
Related: Hype is over: How NFTs and art will benefit from each other moving forward
At the end of the day, influencers who used crypto as a “cash grab” will disappear from the space during down cycles, as have many generations of crypto tourists. We’re still talking to a lot of genuinely engaged creators about how they can incorporate NFTs into a larger-scale crypto activation with their fans. Whether they’re household-name celebrities or creators with an engaged, albeit more niche, audience, the foundation for creators and crypto has been firmly established to withstand any market conditions.
A breakthrough for the “middle class”
It isn’t just household-name creators who are using crypto to forge deeper connections with fans and own their financial relationships instead of allowing Big Tech platforms to dictate the terms – creators with smaller and mid-sized followings have also explored ways to connect with their audiences via crypto and NFTs.
The creator economy is made up of more than 50 million YouTubers, TikTok stars, bloggers and other types of content creators. The sector is growing at a breakneck pace: Ad spend on influencer marketing alone approached $10 billion last year, not to mention creators transacting directly with their fans. Within these direct creator-fan transactions, crypto is becoming more and more common.
Despite the fact that the NFT market has retraced, creators are continuing to explore the space and the tech is continuing to build toward more functionality and utility. Within crypto, creators with million-dollar “market cap” economies are more common than ever. And it isn’t just creators from the cryptosphere who are successfully building crypto economies.
For example, Twitch streamer Alliestrasza primarily streams card games like Hearthstone and Magic: The Gathering Arena to her 225,000 subscribers. Alliestrasza has built a million-dollar economy with her community of ALLIE social token holders by engaging the token community with unique benefits like participating in fan tournaments for various games.
As more creators build these kinds of economies with independent value and functions, we’ll see less and less correlation between social tokens that are designed around active community uses/engagement and the broader, more volatile crypto market that can attract more speculative participants.
Mass adoption and creators
A lot of people who were early to crypto might question why all of this matters. Creator coins aren’t a peer-to-peer electronic cash system or a “global computer.” True, maybe they are not. But bringing new audiences into crypto and helping them understand the value of the technology is the only way to grow the space in a significant way. Crypto is still early on its adoption curve. In order to get the technology into more hands, people will either need to use the technology as it is today (which is occurring at a fairly modest pace) or the technology will have to build more user-friendly layers that are interesting to people with less interest in or knowledge of technology and finance.
Related: Understanding the systemic shift from digitization to tokenization of financial services
Meeting consumers where they are — interacting with their favorite celebrities and creators — is one of the most obvious ways to do that. But the opportunity goes beyond creators and celebrities: Imagine what the adoption curve would look like if every person, brand or website on the internet that could benefit from decentralization was tokenized.
Of course, evolving regulations will play a role in the pace at which crypto and crypto-related projects are developed and adopted. This will be a key area to watch for creators and celebrities around the world, especially in the United States. And for the crypto platforms that serve creators, Financial Action Task Force compliance is already a must.
Related: FATF draft guidance targets DeFi with compliance
But as the technology and regulation coalesce and crypto is adopted into the experiences that internet users are already having, billions of people will gain exposure and become more familiar with the power and potential of the technology.
This could be the rising tide we’ve all been waiting for.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Kevin Chou got his start in esports gaming as the founder and CEO of Kabam, which was eventually sold for $1 billion. His journey into the crypto space began in 2018 when he co-founded blockchain ecosystem Rally and served as its CEO for two years. The firm allows content creators, developers and others to take control of their own digital economies. Chou later founded Forte, a game-centric blockchain platform, where he currently serves as chairman in addition to his position at Rally.