Since the beginning of 2022, the crypto space has had a bearish run with the market taking up the opposite trend every now and then. However, numerous upgrades taking place, such as the Ethereum Merge, Cardano Vasil Hard Fork, and so on have created a new wave of interest within the crypto community.
As we move along with the recent market scenarios, OpenSea; one of the most famous NFT marketplaces have experienced a 99% plunge in daily volume within 90 days! More on this in today’s article.
OpenSea a Ghost Town After Recent Plunge in Volume
BendDAO, a community driven NFT liquidity protocol that supports instant NFT-backed loans, Collateral Listing, and NFT Down Payment has been under a lot of rage due to the ongoing debt crisis. This crisis of BendDAO is also resulting in increasing the risk the NFT bubble bursting. The world’s largest marketplace, OpenSea, has seen a substantial drop in its daily NFT volumes as the NFT market is fearing the NFT bubble burst.
According to the DappRadar analysis, the OpenSea NFT marketplace has processed nearly $5 million worth of NFT transactions on August 28, 2022; which is approximately 99% lower than its record high of $405.75 million worth of transactions that took place on May 1, 2022.
The CoinTelegraph report said that this massive decline in the daily volumes overlapped with equally massive drops in OpenSea users and their daily transactions. This pattern suggests that the value and interest in blockchain-based collectibles might have diminished in recent months. However, the recent behavior can also be attributed to the crypto market trends of the year so far along with the various corporate reports and some behavior from the crypto whales in the recent months. For example; Tesla selling 75% of its Bitcoin holdings.
According to CoinTelegraph news, the drop in interest on NFTs is further visible in the falling floor prices; that is the minimum amount one is ready to pay for an NFT; of leading digital collectible projects. For example, the floor price of Bored Ape Yacht Club dropped by 53% to 72.5 Ether (ETH) on Aug. 28 vs. a high of 153.7 ETH on May 1.
NFT and Ethereum Correlation
The value of an NFT is quoted based on the token of the blockchain it is launched on. Since NFTs are mostly built using smart contracts, that means while mining an NFT or buying one, users usually need ETH tokens in their wallets. This also means that NFT prices will fall if ETH’s market valuation plummets.
Thus the recent fall in ETH price also played a big role in driving the poor NFT statistics. Notably, the price of 1 ETH has fallen from $4,950 in November 2021 to below $1,500 in August 2022.
BendDAO on NFT Liquidity
According to the CoinTelegraph news, BendDAO, the decentralized autonomous organization that enables NFT owners to collateralize their digital collectibles to take loans (in ETH) worth 30% to 40% of the NFT’s floor price, voted to change its protocol’s code to make its NFT collateral more liquid.
BendDAO’s latest vote has changed its NFT liquidation threshold from 95% to 70%. It has also reduced the time offered to borrowers to avoid liquidation from 48 hours to fo hours to attract more bids for their NFT collaterals. To sum it up, the floor price of NFTs, including BAYC, risks plunging further if the market’s liquidity continues to dry up.
agreed, 2020-2021 was crazy get-rich-in-months & the DeFi-NFT-Web3 bubble is going bust now, turns out founders & VCs were scammers only in for the $$$.
But pipl said its over in 2018 too after ICOs.
The next bubble will come 100%, you just need to survive.
play the long game. https://t.co/5f17JfdFfY
— doncrypto (@DonCryptoDraper) August 29, 2022