NFT Report: May Edition
Published 16th May 2023 by MSV Team
NFT Market Fluctuations and the Rise of Meme Coins: A Closer Look
The NFT market has been going through a period of uncertainty and fluctuation, leading to a sense of cautiousness among participants. Big projects like Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) have experienced significant declines in floor prices, indicating a temporary exit of people from the NFT space. Additionally, the Bend DAO hedge strategy has gained attention as a risk mitigation technique, and Blur aims to establish itself as a leading NFT marketplace. The rise of meme coins has also attracted liquidity away from NFTs, but concerns about sustainability and reliability loom. Furthermore, Elon Musk's influence in the crypto space cannot be overlooked.
In our monthly NFT Report, we are highlighting the key takeaways in May. Below are some of the main points demonstrating the sentiment around NFTs and what trends we can watch out for.
1. NFT Market Fluctuations and Uncertainty:
The NFT market has seen fluctuations, leading to hesitancy among creators and developers to launch new projects and updates. With declining NFT volumes, participants are cautious and waiting for more favorable market conditions to drive innovation and project updates.
2. Bend DAO Hedge Strategy:
Bend DAO has gained attention for its hedge strategy within the NFT space. Projects like Bored Ape Yacht Club (BAYC), Azuki (AZUKI), Mutant Ape Yacht Club (MAYC), and CryptoPunks have been used as collateral for securing loans, allowing participants to leverage their NFTs. Users have been able to obtain loans of up to 80% of their NFT's value, creating a hedge against market downturns. For example, individuals who utilized their MAYC NFTs received 12 ETH when the floor price was 15 ETH. Despite the subsequent decline in the floor price, they still retained the 12 ETH, which is significant compared to the current floor price of 9 ETH. Hence it was a stop loss at 12ETH. However, the proliferation of these strategies has contributed to liquidations and a decline in NFT prices, raising concerns about the viability of the NFTs and potential risks.
3. Blur's Progress and Borrowing Platform:
Blur, an emerging NFT marketplace, has made strides in its development and recently launched a borrowing and lending platform. Users can leverage their NFTs as collateral, but the current borrowing rates are set relatively high at 2.65% per day. As Blur attracts more lending ETH, it remains to be seen how it will compete with established players like Bend DAO in the NFT lending space.
Just recently, Blur has also integrated Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) into their Blend product. Users can purchase Yuga assets at a fraction of the original price or provide loans into the pool. The platform offers:
- Liquidity and Loan Amounts
- Active Loan and Loan Transfer
- Earning APY as a Lender
4. Meme Coins Rise:
A noticeable trend in the NFT space is the flow of liquidity from NFTs into meme coins. While meme coins like PEPE have experienced success and currently boast a market capitalization of 1 billion, the market has also witnessed the launch of scam coins, leading to concerns about the future of such projects. The dynamics between meme coins and the NFT market are intriguing, and it remains uncertain if gains made from meme coins will eventually flow back into the NFT market.
5. Elon Musk's Influence:
Elon Musk's influence in the crypto space cannot be underestimated. His tweets have shown the power to impact prices, as seen with the surge in the price of Milday following one of his tweets, where his tweet caused the floor price to surge from 3.9 ETH to 7.5 ETH. Musk's statements and opinions continue to hold considerable weight within the cryptocurrency community.
Final thoughts
The NFT market has faced uncertainties and fluctuations, causing creators and developers to hold back on new projects and updates. The Bend DAO hedge strategy has gained attention, but concerns about sustainability and risks have emerged. Blur strives to establish itself as a prominent NFT marketplace, while the rise of meme coins has attracted liquidity away from NFTs, creating concerns about reliability