The early days of the COVID-19 pandemic showed us human nature in a largely new context. People around the world were locked down and separated, but at the same time newly connected via the internet and social media.
For too many, it turns out that was a formula for serious mental health challenges. But others channeled their twitchy cabin fever into a milder form of madness: financial speculation. From WallStreetBets to Davey Day Trader, 2020 and 2021 saw a manic rush of participants into speculative markets, fueling a huge price runup in Peloton stock and bitcoin – but also Cabbage Patch Kids, action figures and sports cards.
This feature is part of CoinDesk's Culture Week 2023.
Some of that collectible interest infamously spilled over into an entirely new category: non-fungible tokens (NFT). Bored Apes and similar collections garnered the bulk of both fascination (and outrage) from mainstream onlookers. NBA Top Shot, Dapper Labs’ series of officially licensed digital collectibles featuring great moments in hooping, also saw a rush of interest, with sales volumes skyrocketing in early 2021.
Then, as in other pandemic bubbles, came the crash. Top Shot volumes and prices declined dramatically starting in April 2021, leaving many collectors disgruntled. A followup collection from Dapper Labs called NFL [National Football League] All Day launched in August 2022, but didn’t generate the same hype that Top Shot had. It’s a dynamic that has replayed across asset classes as a two-year pandemic party turned into a vicious hangover of systemic collapses and stalled growth.
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But NFTs, and sports collectibles more generally, aren’t going anywhere. Even today, Top Shot volumes are roughly 10 times higher than when the series launched. If it’s not time to pack it in and go home, what can we learn from the sparkling rise and sputtering descent of Dapper’s digital collectibles?
What made the difference between Top Shot’s spectacular success and All Day’s more muted reception? And is a Top Shot-style runup something the creators of digital collectibles should even want to emulate?
In search of insight, we went to the people who really know: the collectors themselves.
Ahmad Ghahary was never much of a sports memorabilia collector, but he's been a huge sports fan and a die-hard fantasy sports player since the 1990s. “I like the season-long [fantasy leagues],” he says, “[And] I started playing more keeper leagues, multi-year legacy teams. So I got into figuring out what prospects will be good for hockey.” Ahmad is Canadian, so hockey came naturally enough.
He was also becoming a bigger fan of the National Basketball Association by December of 2020, when he says he finally learned about the boom in sports collecting thanks to a CNBC report. Ghahary thought he could use his sports insights to capitalize on the trend.
But a funny thing happened on the way to the wax pack.
“When I googled ‘sports card collecting,’ [NBA] Top Shot was the first thing at the top. I started googling NFTs, but there was almost nothing on YouTube. I thought, maybe there’s an opportunity here to get in early.” TopShot sales had opened in public beta in early October 2020.
Ghahary, a pharmacist by day, is a self-professed tech novice. But it didn’t take him long to become convinced that this newfangled NFT thing could work out.
“With sports cards, if you boil it down to what it is, it kind of sounds idiotic anyway, right? Someone printed something on a piece of cardboard and now it’s valuable?” he asks incredulously.
By comparison, Top Shot had a lot going for it. “[A card] is a static image from God knows when. But when you leave an NBA game, what you remember are these moments. And the NBA bottled those up with Top Shot. They’re keepsakes of that exact moment.”
Ghahary was, at least for a time, more right than he could have possibly predicted. He started picking up Top Shot pieces in December 2020, and within a month pandemic pandemonium had followed in his footsteps. Top Shot secondary-market sales exploded from under $10,000 per day in November to nearly $7 million per day by early January, according to data from CryptoSlam.
Sales kept going up. Top Shot frenzy reached a sharp peak on Feb. 22, 2021, when a staggering $45.8 million worth of the collectibles were traded in just 24 hours.
Then the Everything Bubble began to deflate.
Top Shot interest peaked just after the Dow Jones Industrial Average itself, and cooled along with the prices of bitcoin and stay-home stocks. Daily volumes tapered to around $2 million per day by May 2021 and continued declining – though even today, they’re roughly 10 times what they were when Top Shot launched.
Then came the NFL All Day launch in August 2022. While daily secondary market volumes spiked as high as $1.1 million that September, they never got anywhere close to Top Shot’s highs. Trading of the All Day collection has settled down to around $60,000 a day, a bit below Top Shot’s current levels.
Ghahary says he wasn’t primarily motivated by financial speculation, so he stayed in the market as things cooled off. Today, he says he has around 4,500 Top Shot items and close to 1,000 pieces in the NFL All Day series.
From where he’s sitting as a sports fan and collector, Ghahary identifies a few factors that made the difference between Top Shot’s rocket to the moon and All Day’s more modest reception.
Some of that came down to differences between the features of the two collections. “The [All Day] web site itself is not as good as Top Shot,” Ghahary says. “It doesn’t have all the same features, which is a bit confusing. Because it’s both Dapper Labs, so you would think they would use the same technology, but it is very much a separate project.”
Ghahary thinks an even bigger factor was supply. In January and February 2021, as Top Shot interest exploded, Ghahary says the supply of Top Shot’s early “Moments” was out of sync. Most highlights in the collection’s first series were released in editions of about 4,000. This scarcity, along with limitations on withdrawing funds from the platform, helped drive prices up sharply in early 2021.
Then in March 2021, Dapper Labs adjusted to Top Shot’s new popularity by increasing edition sizes and rarity tiers. According to a Dapper spokesperson, the largest editions went up to 60,000, and some players even had two Moments created in that quantity.
“I guess there was demand,”Ghahary says, “because when they sold packs [at that time], it would sell out. And you could flip it and make money. But as they pumped out more supply, values started dropping, and people started leaving. Even if you’re a huge sports fan, if you buy something for $2,000 and it’s worth $20 two weeks later, that’s not great. And that mindset can sort of set in.”
Ghahary thinks that applied even more to the most desirable items in the NFL All Day collection. Dapper Labs “didn’t really protect the scarcity of these moments that should be their most valuable. Tom Brady’s debut moment should be the most valuable one, but if you make 10,000 of them … people won’t value it as highly.”
The danger of speculators
Another Top Shot and All Day collector who came to the NFT world through a passion for sports goes by the username Eddiedunks. In the early days of Top Shot, they say a lot of buyers weren’t that much into sports at all.
“There were different types of collectors, who came from maybe the crypto space.” Many, Eddiedunks says, saw Top Shot as a way to diversify crypto investments, summarizing their motives as “‘[ether]jumped and I put it into Top Shot. I have no idea who these players are, I can just watch the charts.’” Those participants may have made the early 2021 price bubble both bigger, and more fragile. “They were more in-and-out.”
Ghahary admits he wished he had timed the market better, but he doesn’t seem too upset. As a collector rather than a speculator, the monetary value of his NFTs takes a bit of a back seat. “I’ve been buying all along. FOMO was setting in – [it felt like] if I don’t get the Run It Back set now, it might be out of reach for me later. It turns out I could have gotten it later for much less money but I’m happy that I have those.”
Ghahary also isn’t shedding any tears for the mood of early-pandemic Top Shot mania. “I didn’t quite realize when I got in that a lot of other people didn’t care about the actual highlight, they just thought of it as a way to make money. It’s stressful being part of the community when people are freaking out about [price] and complaining. The entitlement that’s in the space doesn’t really jibe with me.”
In response to the supply misalignments caused by Top Shot’s brief price spike, Dapper Labs says it has limited the maximum number of a single Moment created to 10,000. It has also lowered the number of Moments in the current fourth edition of Top Shot down to 16,000, which it says cuts the supply of some players’ Moments by as much as 85% compared to prior editions.
At the same time, Dapper says the overall supply of NFL All Day mints is larger than Top Shot’s, “with the intention of ensuring our Common tier wasn’t too constrained by supply.”
Eddiedunks speculates that Dapper made All Day bigger specifically because it didn’t want a huge initial price runup, or the fleeting speculator attention it attracted.
“My thought was that Dapper was careful to not replicate [with All Day] what happened with Top Shot, when it really spiked up, probably for a good reason … All Day has probably benefited from not having that spike like Top Shot.”
There are a lot of good reasons to avoid a short-term demand spike for a collectible, not least because it sets unrealistic expectations. NFL All Day’s rollout “seems like a more organic type of growth,” Eddiedunks says. “Top Shot is still having to adjust from the February 2021 highs.”
So while All Day might look underwhelming by financial metrics, it seems to be building a better foundation for long-term success. “It seems like a lot of people who are sticking around are really focused on the product itself,” says Eddiedunks. “The people with bigger net spend in All Day tend to be real fans.”
It’s worth remembering that sports trading cards, the inspiration for Top Shot and All Day, were barely better than trash for decades after they first appeared. Probably the most sought-after baseball card in existence, the T-206 Honus Wagner, was a free prize included in pouches of tobacco between 1909 and 1911. Nobody back then was talking about its value as a collectible – but one recently sold for $7.25 million. Prices like that are built on more than simply rarity – they rely on mythology, narrative, and other intangibles (which the Wagner card has in spades).
While NFTs may never have quite the poetry of a cardboard giveaway, they have one clear advantage over their analog forebears: community. While Ahmad Ghahary estimates he is slightly underwater on the market value of his huge collection, the shared passion of Top Shot and All Day collectors has been far more significant than any financial impact.
“I really forged some new friendships,” he says, through both online social circles and special events Dapper Labs has invited him to as a top-end collector. As a busy professional, he says, “it’s hard to do that sometimes.”
Community is often thrown around as a buzzword by NFT collections, but it’s hard to parse exactly how pictures of cartoon penguins are supposed to bring together a real community based on common interests. With its sports franchises, Dapper Labs has a much clearer path to something sustainable – even if it takes a while to get back to the market prices it saw in its passionate, tumultuous early days.