The non-fungible token (NFT) craze of 2020 and 2021 has quieted down over the years, but there’s reason to be optimistic about what’s to come with the technology, one expert says.

At its height, NFT trading volume reached US$17.6 billion, with the number of buyers growing some 3,700 per cent year-over-year, according to a report by NFT analytics platform

Now, however, many of the digital art pieces are selling for a fraction of what they were worth just a couple of years ago. For example, Justin Bieber bought a Bored Ape Yacht Club NFT in 2021 for $1.3 million, which was only worth about $60,000 a year and a half later.

Matthew Hougan, chief investment officer at Bitwise Asset Management, told BNN Bloomberg there is reason to be bullish on the NFT space now, despite the market conditions.

“What we’re excited about at Bitwise about NFTs is about what the technology represents,” he said in the television interview.

Hougan said the initial NFT craze amounted to a “proof of concept” for the exchange of digital assets, but we’re now seeing how the second generation of the NFT technology can be used.

“We know they can work, and now they have to scale and penetrate the real world,” he said. “I suspect that will happen within the next two or three years.”

“Of course trading volumes have come down, but we’re excited about what’s going in the rest of NFT ecosystem.”

Hougan specifically pointed to Nike, which teamed up with EA Sports for Nike’s “virtual creation” collectible sneakers to be integrated into the video games. 

Nike has been the most successful brand in the NFT marketplace, having earned US$185 million in revenue as of February.

When it comes to NFT investments, Hougan suggests investing in cryptocurrencies, specifically Ethereum, or investing in a company that is actively working in the space, such as Nike.

“Long-term, I’m very bullish on the price of bitcoin,” he said. “I think we’ve entered a new three-year, four-year bull market in crypto. I think we’re going to set new all-time highs.”