Blue-chip NFT collections like Bored Ape Yacht Club, which for a while outperformed the rest of the crypto market, are being hit harder than cryptocurrencies by a deep rout that is souring sentiment across the sector.
BAYC’s average sales price plummeted 29% over the last seven days in US dollar terms, while transactions have tanked by 21% and user numbers are down 27%, according to NFT watchers Price Floor and DappRadar.
Until recently, the popular NFT collection has generally fared better than the rest of the crypto sphere. Its floor price hit an all-time high at the end of April, according to NFT Price Floor data. Meanwhile, Bitcoin is down by more than 50% since its all-time high in early November.
“There have been substantial portfolios of NFTs built in the last six months,” said Michael Bucella, a partner at BlockTower Capital Advisors, in an interview with Bloomberg.
But BAYC’s recent fall from favour seems to reflect a wider trend spreading across the marketplace for nonfungible tokens. The JPG NFT Index, which provides exposure to a broad basket of NFTs, also fell by about 26% this past week.
“They are just fairly illiquid markets generally,” said Bucella. “If the market is selling off en masse, they are going to sell whatever they have.”
In comparison, crypto bellwether Bitcoin tumbled 17% and Ether is down 15% over the last week, according to CoinMarketCap. Token prices were seen slipping during the recent selloff in tech stocks in traditional markets and as troubles surrounding TerraUSD, an algorithmic stablecoin meant to be pegged to the US dollar, have come to light.
NFT-backed loans, which allow borrowers to put up their digital artwork as collateral in order to obtain funds, may also be contributing to the recent nosedive in NFT sales.
“This could be just collateral selldowns to satisfy loan obligations,” said Bucella. “If you had folks taking some pretty significant hits on their assets, there’s a potential loan unwind.”