The recent unexpected and staggering market sell-off clearly stated that there’s no safe haven in the world of digital currencies. The floor prices for two of the largest NFT collections on the market, Bored Ape Yacht Club, which have fallen to 74 ETH ($92,223), and CryptoPunks with 48 ETH ($69,473), according to NFT Price Floor. On the other hand, pieces in the BAYC bundle had an all-time high of its floor price worth 153.70 ETH, while CryptoPunks had the same variable at 123 ETH.
However, the question is, is the bear market at work in the recent collapse of NFT collections? Continue reading to find out.
The Decline In Prices Hitting Every Media Platform
On June 15, 2022, Bitcoin had recently hit a new 18-month decline and is now 70% lower than its historic high of $69,000 in November 2021. Because many alternative coins are linked to Bitcoin’s value, the majority of the cryptocurrency market is also in decline. On June 12, 2022, The Wall Street Journal stated that the cryptocurrency lender, Celsius Network, halted most of its operations, including withdrawals, swipes, and common exchanges.
“We are taking this necessary action for the benefit of our entire community in order to stabilise liquidity and operations while we take steps to preserve and protect assets,” the company said in a blog post.
Part Of A Cyber Attack?
A statement partially amplified the massive sell-off in NFTs made just a day before the event by Gordon Goner, co-founder of Yuga Labs — the company that owns both the BAYC and CryptoPunks collections — regarding an “impending” attack on the company’s social media accounts. But that should never be the case if users are engaging in platforms like Bitcoinmotion.tech, as they provide traders with legitimate connections with brokers who possess advanced tools for trading and security.
Regardless, the upcoming attack is assumed to have the assistance of an insider in Twitter who will help nullify the accounts’ protections. The accounts of Yuga Labs were compromised three times in 2022, with some cases involving complicated phishing attacks that drained millions of dollars from users’ NFTs.
Meanwhile, according to DappRadar, the percentage of customers on OpenSea.io, the world’s biggest NFT marketplace by volume, has fallen 14%in May 2022. Furthermore, the trading volume on a monthly basis fell by 65% to $500 million. With this in mind, the number of trades increased by 6.4% month over month, which could be attributed to the massive magnitude of users looking to offload their NFT collections for a higher price.
The Sinking NFT Market, Along With Shrinking Figures
In May 2022, although the volume of trading dropped by up to 90% for certain top collections, the market price of the top NFTs dropped significantly. On a serious note, there will never be shame in selling your assets under these circumstances; whether you are making huge profits, shifting positions, or loss harvesting, it’s advised to do what is best for YOUR situation.
“It’s hard to know what to tweet about right now, the markets are brutal, but the future for #NFTs is bright; the tech of the blockchain is what gives them such potential, not the current price of a cryptocurrency,” said Pranksy, a major NFT collector.
Are NFTs In The Bear Market Now?
NFTs, unlike crypto assets, are not as susceptible to the financial cycles of the stock market or the economy. NFT Evening writer Theo stated in a March 8 article that “NFTs are… proving to be bullet-proof against market crashes.”
Even though NFTs are not directly related to the crypto market, they are beginning to experience a decline of their own. It has been reported that a 40% drop in NFT sales had recently happened in February, down from $4.4 billion in January.
According to The Cryptonomist, many recognised NFT projects, including Bored Ape Yacht Club and CryptoPunks, lost at least 63%of their value in a frighteningly short period of time in May. That much of a drop indicates that NFTs are in a bear market.
What Can You Do
When a financial market collapses, often regarded as a bear market, according to Cryptoticker, it is the ideal time to invest in non-fungible tokens because “many NFTs have proven to exceed expectations after the bear market.” Additionally, Cryptoticker writer Owotunse Adebayo stated that “the low risk and price levels associated with a bear market indicates that, should the value collapse, losses will be low.”
Furthermore, several individuals buy and collect NFTs for the underlying value; in the same way, they would obtain vintage items or other art pieces. Consumers usually select NFTs they like from designers, creators, or businesses they want to support, with little regard for long-term value.
