BAYC NFTs face challenges as major holder exits

BAYC NFTs face challenges as major holder exits

The BAYC NFTs experienced an 8% price drop and overleveraging issues as a major holder sold off assets, affecting traders and the market.

Market struggles as major holder sells Bored Apes

Bored Apes Yacht Club (BAYC) non-fungible tokens (NFTs) recently faced an 8% price drop after a prominent holder sold 27 of them, valued at nearly $3 million, to pay off BendDAO loans. The reduced NFT prices impacted other traders on BendDAO, with over 1,000 Bored Apes serving as collateral on lending protocols. 

The BAYC NFTs have been a popular choice since their 2021 launch. However, the recent drama involving BendDAO loans and overleveraged traders raises questions about the collection’s position in the NFT world. The price drop, primarily caused by one investor, exposes the collection’s market fragility. With more than 1,000 Bored Apes pledged as collateral on lending protocols, the ecosystem’s overleveraging puts traders’ positions under pressure. The collection’s ability to recover from this setback remains to be seen.

BAYC NFTs fell below BendDAO’s health factor threshold

This event highlights the number of people borrowing against the NFTs, revealing an overleveraged BAYC ecosystem. This situation emphasizes the extent to which individuals are taking loans against the NFTs, valued at approximately $113,000 each as of April 13. This situation forced more than 100 Apes into the Health Factor Alert List, meaning they risk liquidation through the auction process. 

BendDAO employs a scored ‘health factor‘ for loans, allowing liquidations in the form of an NFT auction when the ‘health factor’ of an NFT loan falls below 1. The Health Factor Alert List showcases loans with health factors nearing 1, and if the Loan Health Factor drops below 1, the loan appears on the Available to Auction page, where protocol users can bid NFTs.

NFT market contrasts and top-selling collections

In stark contrast to earlier this year, when NFT sales surged, data revealed a 22% to 29% decline in the number of NFT buyers and transactions during March. Ethereum’s blockchain dominated March sales, accounting for over 60% of total sales, while Solana-based NFT sales made up 10.57%. Despite the overall market slump, CryptoSlam’s data shows that some NFT collections, like BAYC and Cryptopunks, retained their popularity during March, generating $35.81 million and $30.11 million in sales, respectively.

Amid the market decline, Azimuth Points #236, BAYC #5,116, and Fidenza #971 emerged as the three highest-priced NFTs, selling for $704,000, $689,000, and $561,000, respectively. These sales indicate that, while the overall NFT market faces challenges, some collections can still attract buyers and maintain their value.

In conclusion, the recent events surrounding the BAYC NFTs serve as a reminder that the NFT market is not all smooth sailing, and traders should be prepared to weather the storms.

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