The minimum trading price of top Ethereum NFT collections, such as the Bored Ape Yacht Club and CryptoPunks, has plunged over the last 24 hours. This trend of sharply falling prices for “blue chip” NFTs continues, as floor prices for CryptoPunks and the Bored Ape Yacht Club have dropped nearly 8% and 7% respectively over the last day, according to CoinGecko data. Nansen’s Blue Chip 10 index of the top 10 NFT collections has dropped 31% year-to-date.
In recent weeks, the Bored Ape Yacht Club has sustained sharper losses, with the floor price falling almost 19% over the last 30 days when measured in ETH. A Bored Ape currently starts at 36.4 ETH, roughly $68,200, which is the lowest Bored Ape floor price since November 2021, when the project was just taking off. CryptoPunks’ prices, on the other hand, have fallen by less than 3% in the same timeframe.
Some NFT traders believe the primary factor behind the floor price crash is the influence of the leading NFT marketplace Blur on trading and lending volumes. Data from crypto analytics firm Nansen shows that NFT trading volume has declined significantly over the last two months. The adverse effects of Blur on NFT trading volumes and prices were first seen towards the end of April, about two months following the first allocation of the Blur token airdrop that helped the marketplace overtake OpenSea.
The decline in NFT trading volumes since May can likely be attributed to the end of doubled trading rewards on the Blur marketplace. Notable pseudonymous trader and Wumbo Labs co-founder Cirrus pointed out that traders are also letting their NFTs sell for lower prices to maintain high trading volume and farm more tokens on Blur, further suppressing floor prices.
On May 1, Blur launched its NFT lending platform Blend, which quickly attracted significant volumes as users rushed to farm BLUR tokens. According to a Dune dashboard by pseudonymous developer Beetle, the total amount of loan volume on Blend has surged to $929 million to date, dominating over 95% of the NFT lending space.
The founder of DeFi analytics platform DeFiLlama, 0xngmi, stated that Blur rewards incentivized users to churn loans as much as possible, inflating loan volume substantially. These loans also add liquidation risk in the market, which can push their prices down. For example, Cirrus highlighted a risky leveraged position on Blend worth over $2 million, backed by 32 Bored Ape NFTs as collateral. Cirrus revealed that the user had already incurred losses of around 100 ETH from the loans, which they used to “keep farming Blur.”
While it seems evident that the NFT market has lost momentum, it remains to be seen whether the Blur marketplace’s influence on trading and lending volumes is the primary factor behind these falling prices. The NFT market is still relatively young, and adapting to changes in various platforms could shape its course in the future.
Source: Decrypt
