the wild world NFTs have taken the crypto world by storm over the past 12 months, and while not everyone’s favorite, they have caught most people’s attention due to the sheer volume and popularity of NFTs. number of projects that appear in the space.
The most popular NFTs are also often the most valuable, with buyers spending hundreds of thousands to millions of dollars to purchase an NFT – often tied to a community – that they can keep or later trade for a profit (or a loss). But how liquid is the blue chip NFT market really?
The top 50 blue chip NFT collections have seen multimillion-dollar sales in the past seven days, according to NFT data aggregator CryptoSlam. During that time, the top 10 NFT collections alone brought in more than $500 million in transactions from 19,468 unique buyers, according to the data.
But many NFT holders have said that with this demand comes inherent risk and market volatility, among other factors, which play a role in the future of these digital collectibles and their liquidity.
It’s also worth noting that the number of buyers of high-roller NFTs is generally lower than that of participants in the broader NFT market, but PROOF Collective’s new – and possibly top-notch – NFT Moonbirds have officially been hit on April 16 and accounted for the majority of sales tracked by CryptoSlam over the past seven days, grossing $297 million from 10,813 buyers. (A mint is when a digital file is transformed into an NFT or digital asset on a blockchain, usually Ethereum or Solana, and its information is permanently stored on the blockchain.)
Even with Moonbirds, on April 17, the day after its launch, there were over 10,000 buyers. But that number dipped to just 296 on April 19, according to data from CryptoSlam. The floor price, which is the lowest amount you can spend on the collection’s digital collectible, has also dropped by around 16% in the past 24 hours.
“The problem is, when prices go down, it goes fast,” Nick O’Neill, CEO and co-founder of The Nifty, told TechCrunch. “This is especially the case in NFTs. When people start to worry, prices can change dramatically.
Bored monkeys are anything but boring
One of the most popular NFT collections is Bored Ape Yacht Club (BAYC), a collection of 10,000 monkeys on the Ethereum blockchain. It currently has a floor price of over 113 ethers, or $351,868. To date, 496,700 ethers, or $15,466,641,960 in volume for BAYC have been traded, according to data from OpenSea.
“If I sold my [BAYC] right now for 50 ETH it would sell out in two seconds. If I sold it even at 80 ETH, it would probably also sell in seconds, just because of the current market,” O’Neill said.
While BAYC’s floor price is near its all-time high, there was a time when it fell 37% from February 26 to March 10, 2022, data from OpenSea showed, just before its cryptocurrency’s launch. , ApeCoin. Prices have since recovered, but this is a signal that even the biggest NFT projects can face downturns.
In March 2022, Yuga Labs, the parent company behind BAYC and others, raised $450 million in a massive seed round led by Andreessen Horowitz, valuing the company at $4 billion. The NFT company showed no signs of slowing down even before this capital raise, acquiring CryptoPunks and Meebits from Larva Labs earlier this month to expand its position in popular NFT projects.
“In this market, I don’t think there’s necessarily a liquidity issue,” O’Neill said. “However, the liquidity problem will appear when everyone wants to sell and when the market closes. The best time to sell is usually up.
Limited buyers, but big spenders
NFTs are much more liquid than the physical art market, O’Neill said. “If you try to sell a painting that’s worth more than a few hundred dollars, you won’t get any buy action unless you go to a traditional market.”
While traditional art may have a less liquid market, blue chip NFTs are limited because to buy one the full amount of cryptocurrency is required, often limiting the buying pool to a small group of people.
“The cheapest BAYC is north of $350,000 – if you have that in cash, you can put a down payment on a house,” Parzival Fund CEO Josh Bobrowsky told TechCrunch. “It’s something that people don’t realize, not only are they expensive, but there’s no leverage; if you buy a Lamborghini, you might only need $50,000 to buy a $4 million Lamborghini. But if you want a BAYC, you need the full amount of money in Ethereum today, completely liquid.
In the last 30 days, there were 40,038 buyers across the top 10 NFT collections by sales volume, according to data from CryptoSlam. While that might seem like a lot of people, the NFT community as a whole had over 458,424 monthly NFT traders in March, according to Dune Analytics data compiled by user hildobby, so those 40,038 buyers don’t represent than 8.7% of the total NFT merchant ecosystem. .
“I always watch how many people sign up; the number of people signing up and buying matters,” said William Quigley, co-founder of NFT WAX marketplace and former co-founder of Tether, the world’s largest stablecoin by trading volume.
“For example, if I look at a company and they sold a product for a million dollars to one person and another company sold a million clothes for a dollar to a million people, I think I better off with the million people,” Quigley told TechCrunch. “Every day most of these NFT markets and collections have single digits for several dozen people trading at very high prices – that’s what you expect.”