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After a year of record crypto highs, NFT booms and metaverse development, the crypto market took a downward turn. Fashion and luxury brands are responding.Fashion has gone all in on Web3, but a crypto downturn is dampening the industry’s excitement, curbing stunt-like NFTs, pausing Web3 hiring and forcing a rethink on metaverse strategies.
The price of Bitcoin, the most highly traded cryptocurrency, reached an all-time high of $68,000 in November 2021. Since then, the market has slumped, with Bitcoin losing nearly three-quarters of its value, hovering around $21,000 today. The ripple effect of the crypto bear market can be seen throughout the entire decentralised finance space. Blockchain protocol and payment platform Terra plummeted from an inflated all-time high of $119 in April to less than a dollar by early May; its native token Luna was then delisted from many major exchanges like Coinbase. Lending protocol Celsius froze user withdrawals earlier this month, and Three Arrows Capital — a prominent crypto lending fund — defaulted on a loan worth $670 million in various cryptocurrencies on Monday. The world of decentralised finance is no stranger to volatility: a major downturn in 2018 saw prices of Bitcoin plummet from 2017 highs of $20,000 to as low as $3,000. What’s different this time is the involvement of many other industries in the space, including fashion, which has embraced crypto and Web3 over the past year: Gucci, Philipp Plein, Farfetch and Balenciaga announced they would begin accepting crypto payments; others began testing digital fashion via NFTs and virtual real estate on blockchain-based platforms Decentraland and The Sandbox. Values of branded NFTs have climbed: the initial general sale for Adidas’s “Into the Metaverse” sold out in seconds with nearly $23 million in sales, and Burberry’s NFT characters through Blankos Block Party resold for three times the original $299 price. With all of this buy-in, what happens now? Fashion insiders and people familiar with fashion brand projects told Vogue Business that some brands are starting to pause hiring for Web3 teams or are cautious about introducing new projects. Others are relieved that the excessive hype has quieted down, giving a reprieve from round-the-clock drops and competitive timelines. Still, amid an industry rife with scepticism and confusion, there is a nagging concern among developers that brand executives might frame this drop as proof that cryptocurrencies and blockchain-based projects aren’t viable. Full Story here at VogueBusiness.
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