Good day everybody,
I hope you are all having an excellent day, welcome to CryptoGod-1's blog on all things crypto. Today I will be looking at the recent sale of a Bored Ape Yacht Club (BAYC) NFT for the tidy sum of 200 ETH, which is around $372,800. The transaction took place on the 7th of July, and stands out due to the fact the current floor price of the BAYC collection is around 35 ETH.
BAYC #3953
Back on the 2nd of May 2021 the NFT was purchase for 18.888 WETH by an Opensea users known as eight8eight. Since then the NFT has been transferred and moved between wallets, until the 7th of July 2023 saw the NFT sold for 200 ETH. Many have been shocked and surprised by this move, as the NFT was considered the second rarest within the collection by many insiders, including the rarity website "Rarity Sniper."
The NFT, as shown above, is made of a cream coloured ape munching on a pizza with its eyeballs out of their sockets. The reason so many are surprised by the sale as it would have been expected to command a much higher price back in the NFT boom of 2021/2022. When we consider the amount some of the NFT's from the collection, especially the rarest ones, went for back in the boom, the 200 ETH is a fraction of what could have been. Sotheby’s managed to sell BAYC #8817 back in October 2021 for a reported $3.4 million!
Current BAYC Predicament
The popular NFT collection has been suffering of late, especially after the release of the BLUR NFT marketplace. The NFT market has crashed from its boom in 2021, with prices going from the previous highs of 100's of ETH down to below 50 ETH. While the value of ETH is still less than half of its all time high, the value in these NFT's have fallen significantly. Considering the average cost of a BAYC is currently hovering around the 35-50 ETH mark, seeing a sale for 200 is certainly considered an outlier. However, given its rarity and previous values, many would consider this a poor time to sell.
The creators of the collection, Yuga Labs, have made it clear they are not interested in getting involved or expressing opinions regarding sales that take place within their collection. A representative emphasized the company's main focus is creating exceptional experiences for their communities and expressed enthusiasm for the upcoming projects they have planned for the future.
As mentioned above, many are laying the blame of the falling floor price in popular NFT collections at the NFT marketplace Blur. Their incentivised method of Blur's bidding system means "farmers" are about to crash NFT collections without any real holders selling, while the actual number of holders increases. Blur has been the dominant marketplace for NFT's since its release, but many are suffering from the impact of its bidding system, as shown in the Trevor.btc Twitter post below.
He notes how these farmers earn points for having bids active, and not actually needing to buy the NFTs. If a bid gets accepted, they need to dump the NFT as quickly as possible to get their ETH back and place more bids. He explains the two main types of bidders - Whales and Chumps.
The Wales looks to get a loan on the NFT as soon as a bid is accepted, therefore allowing them to place lower bids than before.
The Chumps don't possess the liquidity to take a loan and therefore they need to list the items on or around what they paid, which in turn lowers the floor price.
There are also bots in the mix, which adjust to these moves and methods in real time, which in turn also lowers the floor price.
Floors get lower -> bids get lower -> floors get lower -> bids get lower -> DEATH SPIRAL
Their main aim is to increase their points and make any loses back via the $100M in airdrop incentives. The founder of Blur, Pacman, tweeted against the notion that Blur is killing the NFT market. He stated that 99% of market participants leaving is whats killing the market, and that Blur possibly prolonged the lifespan of the market.
Can the NFT Market Recover?
While projects are crashing and burning around us, Yuga Labs have not been the only creators to remain silent on the issues at hand. Other notable NFT collections like Azuki and Cryptokitties have also experienced substantial drops in their floor prices over the past couple of months but have kept their thoughts on the situation to themselves. They will not give any insights into their perspective on the future of NFT's or the market, or about any potential direction in the revitalization of the projects.
Similar to the cryptocurrency market, the bear market has been tough for NFT's. The situation appears to be particularly concerning given the short period it took for their values to surges, and its sharp decline. While the NFT space is still extremely new, it also reflects the volatility and uncertainties that exist within the blockchain and digital assets markets.
Many will still point to the fact once the bull market kicks off, the NFT market is likely to follow. Whether that actually happens or not remains to be seen. For now the likes of Trevor.btc is advising against the sale of NFT's such as BAYC in an attempt to keep them out of the farmers hands. At the same time the value behind a lot of these NFT's is based off the status and experiences associated with owning them. When times are bad, people look to sell as they question the value of these assets. It is a difficult balancing act, and the long term certainly around NFT's remains extremely unclear.
Have a great day.
Peace. CryptoGod-1.
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