OpenSea, the world’s largest non-fungible token (NFT) market, has seen a substantial drop in daily volumes as fears of a potential market bubble mount.
OpenSea volume plummets to yearly lows
Notably, the market processed almost $5 million in NFT transactions on August 28, about 99% less than its record high of $405.75 million on May 1, according to DappRadar.
The massive drops in daily volumes coincided with equally drastic drops in OpenSea users and their transactions, suggesting that the value and interest in blockchain-based collectibles has waned in recent months.
This is even more visible in the fall of the minimum prices of the main digital collecting projects.
For example, the floor price of a Bored Ape Yacht Club NFT is down 53% to 72.5 ETH on August 28 vs. a high of 153.7 ETH on May 1.
Similarly, the floor price of CryptoPunks, another major NFT collection, fell nearly 20% from its July high of 83.72 ETH.
The NFT bubble is bursting
NFT prices are quoted in the native currency of the blockchain network on which they are debuted. Therefore, a digital collectible created on Ethereum will be purchased using Ether (ETH), which also means that NFT prices will fall if the market price of ETH crashes.
An ETH bear market seems to be one of the main drivers behind the bad NFT stats. Notably, the price of one Ether has fallen from $4,950 in November 2021 to less than $1,500 in August 2022.
BendDAO votes to improve NFT liquidity
Last week, BendDAO, a decentralized autonomous organization that allows NFT owners to collateralize their digital collectibles to take out loans (in ETH) worth 30% to 40% of the minimum price of an NFT, voted to change the code your protocol to make your NFT collateral more liquid. .
The vote came after an increase in the price of Ether sent the value of ETH-denominated loans skyrocketing in dollar terms. Meanwhile, on the other hand, NFT prices plummeted, reducing the value of collateral held by BendDAO.
As a result, BendDAO is now facing its own time of debt crisis, where borrowers are unable to repay their dollar-denominated loans due to falling ETH prices, and lenders are struggling to recover the amount borrowed due to falling prices. collateral valuations.
The latest BendDAO vote has changed its NFT settlement threshold from 95% to 70%. It has also reduced the time offered to borrowers to avoid liquidation from 48 hours to 4 hours to attract more bids for their NFTs left as collateral.
In other words, the floor price of NFTs, including BAYC, is at risk of falling further if market liquidity continues to dry it out.
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 USD USD USD .
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
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