Bored Ape Yacht Club NFTs Ethereum Floor Price Drops to 8-Month Low

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The Ethereum floor price of Bored Ape Yacht Club (BAYC) NFT inflow slumped to a year-to-date low amid a continued NFT market crash and broader crypto market crash.

At 65.68 ETH, the floor price of Bored Ape Yacht Club NFTs has fallen to levels not seen since January 2, 2022. According to data from CoinGeckoit has been on a downtrend since hitting an all-time high of 153.7 ETH on May 1.

BAYC remains the largest NFT collection by market capitalization, at 656,800 ETH—just above his closest rival, CryptoPunkswith a total market cap of 655,000 ETH and a floor price of 65.5 ETH.

However, it’s not all bad news for Bored Ape wielders. The fluctuating price of Ethereum means that in dollars, the BAYC floor price is around $107,000 today; significantly lower than at the start of the year, when it was slightly below $256,000, but up from the low of just under $87,000 recorded in June.

BAYC faces liquidations on BenDAO

To fuel the flames, Bored Apes acquired using loans on peer-to-peer lending service BenDAO could be liquidated, due to the drop in the collection floor price.

BenDAO, which allows customers to borrow ETH in exchange for NFTs, allows users to take out loans for up to 40% of the floor price of an NFT. If the floor price of the NFT drops to a point where the “health factor” of the loan secured by the NFT is less than 1, the NFT is placed in a 48-hour auction and sold to the highest bidder if the loan is not refunded.

The health factor is defined as a “digital representation of the security of your deposited NFT against the borrowed ETH and its underlying value”.

There are currently 72 Bored Ape Yacht Club NFTs on the platform in the ‘danger zone’, defined by NFT trader Cirrus, who broke news of the potential liquidations, as having a health factor below 1.2 – where they risk a drop in the price floor triggering a liquidation.

BenDAO states in its FAQ that “short-term fluctuations in the floor price of NFTs are normal” and that “the consensus on blue chip NFTs was not built in a day, and it will not collapse in a short time period. »

Its documentation also notes that “the platform only has a temporary floating loss and no real loss”, but leaves open the question of what happens if no buyer steps in and the value of the NFT falls below. that of the debt accumulating interest.

With the BAYC floor price down 57% from its all-time high recorded in May, and 2.57% of the BAYC collection related At BendDAO, this is a question that could become pressing.

NFTs Follow Crypto Market Fall

NFTs like BAYC that operate on the Ethereum network and are sold for Ether (ETH) tend to obscure the price of Ethereum.

Following the collapse of Terra’s algorithmic stablecoin UST in May and the bankruptcy filing of hedge fund Three Arrows Capital and crypto-lender Celsius Network in June, Ethereum lost 43% of its value.

The floor price of BAYC thus fell by 36%, from 116 ETH to 65.5 ETH during the same period from May to June.

However, as investors prepare to capitalize on the upcoming Ethereum merger, NFTs have taken the plunge with the second-largest cryptocurrency by market capitalization.

Between June 19 and August 20, Ethereum rose from an eight-month low of $995 to $1,634, while BAYC’s price floor continued to decline.

Zooming out, the NFT market as a whole has not fared well over the past 12 months.

Number of NFT sales compared to USD sales. Source: NonFungible.com

The daily sales figures (orange) have declined while the dollar value of sales (white) has stagnated.

According to NonFungible.com Q2 2022 industry report“interest plummeted” in NFTs, with “geopolitical concerns” hampering the market.

“The liquidity of most collections has declined significantly, thereby lowering the release rate in the secondary market,” the report suggests.

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