Morning Minute | NFT Market Loses $1.5 Billion

GM!

Take a minute to catch up on the latest in the Web3 space with today's NFT market analysis, top movers, and upcoming mints.

TylerD's Market Summary

Find out just how bad the damage is, why it happened, and where we go from here.

📉 NFT Nosedive

We just closed one of the worst one-month stretches in NFT history.

As of July 3, the NFT PFP market alone had lost over $1.46B in market cap in just the past month (much more if you zoom out to March).

That number is low, as it only considers projects over 1 ETH floor and doesn't include the collapse in mid-tier or rare premiums. So the total loss is actually worse.

There's been a slight rebound in the past few days since that figure was pulled, but the damage has been done.

Now it's time to understand why, and what happens next.

What Happened?

The Azuki Elementals mint ending in disaster started a cascade of liquidations that ended in a massive sea of red.

Here are some current notable PFP floors and their 30-day change:

• Punks: 42 ETH (-21%)
• BAYC: 29.5 ETH (-37%)
• Azuki: 7.24 ETH (-59%)
• MAYC: 6.23 ETH (-37%)
• Captainz: 6.05 ETH (-36%)
• Pudgy Penguins: 4.1 ETH (-14%)
• DigiDaigaku: 2.8 ETH (-19%)
• BAKC: 2.29 ETH (-44%)
• CloneX: 1.89 ETH (-30%)
• Doodles: 1.66 ETH (-27%)
• Moonbirds: 1.63 ETH (-24%)
• Meebits: 1.27 ETH (-36%)

So everything is down, ranging from -14% to -60%. And that's after a 2-day recovery - it was even worse a few days ago.

How did leading art NFTs hold up over the same time?

• Autoglyphs: 199 ETH (+14%)
• Fidenza: 69 ETH (+1%)
• Ringers: 40 ETH (-5%)
• Gazers: 19 ETH (+11%)
• Squiggles: 9.79 ETH (-10%)
• Genesis by Claire Silver: 8.68 ETH (-33%)

So a bit of a mixed board there, but clearly the top-end art NFTs held up considerably better than PFPs.

Why Did It Happen?

Looking back, there seems to be a series of factors that contributed to this swift downturn in the PFP market.

• PFP holders sold or leveraged up to prepare for the Elementals mint
• The Elementals mint took $40M out of the ecosystem (more after royalties), and after the market rejected the outputs and team handling, Azuki, Elementals and Beanz all crashed
• This led to a series of liquidations on Blur's Blend, with over 1,200 liquidations in a 4-day period
• Supply was dumped primarily on Blur farmers, who don't want the NFTs, and in-turn sold

That series of events also took place over a holiday weekend, which was likely going to be a lower liquidity one anyway.

It led to what was probably the worst stretch of days we've seen to date in NFTs.

What's Next?

This is the key question now - what happens next?

There have been a few positive signs. 

New loan origination has fallen sharply on Blend after the liquidation spiral, down to the $13M-$15M/day level (from $20M-$30M).

Floors have rebounded and been in green the past two days, seemingly after an influx of ETH from 1 notable farmer in MachiBigBrother (this is not necessarily good).

There are still several problems though.

Anecdotally, Blur farmers ate most of the supply, and most of the losses in this recent cliff dive. They are likely forced to keep farming now to reap maximum $BLUR rewards to make up for their losses. And more farming leads to more declining floors, unless new buyers come in.

And new buyers don't seem to be coming. Trust in PFP projects seems to be finding new lows on the weekly. The Elementals disaster followed by a rough Captainz reveal event (a story for later) have led to the sentiment that nothing a team does will be received well - so why even buy?

If existing participants aren't buying anymore, and no newcomers are entering the market, we've got a problem.

The most likely scenario? A continued, slow downtrend, until either some major stimulus comes, a significant change in the Blur farming incentives (i.e. end of Season 2), or new buyers come in (does Pimpcapital have any friends?).

I could be wrong, but buying here because "there's capitulation on the timeline" seems  unwise purely based on that read.

It's become increasingly important to understand who the recent buyers of NFTs are in each collection (farmers, flippers, or collectors) and make decisions based on that data, vs a broad read on sentiment.

We have now gone lower than every prior "capitulation dip," so even if short-term rallies happen (they have, and we're seeing one now), it doesn't mean the longer-term trend is bucked.

Looks like we're in for a cruel summer.

🚚 What else is happening in NFTs?

Here is the list of other notable headlines from the day in NFTs:

• Trading volume came in around 16k ETH on Tuesday, a consistent level over the past 4-6 days; NFTs saw mostly green on the day
• Memeland Captainz revealed on July 1, debuting "smart PFPs" that will be customizable with traits that can be built and sold; the team is also paying bug bounties of 0.069 ETH for those that recommend fixes
• Kevin Rose shared a "State of Moonbirds" thread, walking through accomplishments, their new art focus, upcoming Mythics reveal and a new rewards system coming with a token
• Jack Butcher's Opepen 008 "Infinite" revealed on Tuesday with a unique twist that all 80 are the same art, with only the metadata being different; floor opens at 1.39 ETH with 5 sales
• Pudgy Penguins announced that Banana Suit Pudgy collectibles are coming on Saturday July 8, with just 150 in supply
• The hyped new mint Ether cut its supply to 5,555, citing market conditions and sentiment; 1,877 NFTs were sold in the presale at 0.35 ETH or free (with lockup) and the floor is at 0.68 ETH with 3,678 NFTs left to be sold next week at 0.65 ETH
• A few notable art sales in the past days, as a Lost Robbie sold for 175 ETH and an early Grant Yun sold for 14 ETH

🌎 Around Crypto and Web3

A few other Crypto and Web3 headlines that caught my eye:

• The crypto market was down on the day; BTC -1.8% to $30,440; ETH -2% at $1,915
• Binance Australia offices searched by regulators as global crackdown continues
• Lacoste has updated the metadata on their UNDW3 NFT, kicking off a new aspect of their project with gamification, quests, rewards and more coming

🚀 NFT Total Volume

• Azuki (3,299 ETH, 7.25 ETH Floor)
• BAYC (3,159 ETH, 29.5 ETH)
• MAYC (2,153 ETH, 6.23 ETH)
• DeGods (839 ETH, 8.29 ETH)
• Azuki Elementals (617 ETH, 1.19 ETH)

📈 NFT Floor Price Increase

• Sapienz (178%, 0.13 ETH Floor)
• Edenhorde (69%, 0.1 ETH)
• Realms (33%, 0.36 ETH)
• FreeNFT OG Ticket (32%, 2.25 ETH)
• 6Sixty6 (27%, 0.19 ETH)

🗓 Upcoming NFT Mints and Reveals

Today is a very slow day coming off the American holiday weekend.

Given the blood bath in the NFT market, any new mints will be highly scrutinized and minting out will be much more difficult. It's likely going to be a slow week of new drops and events.

If you want more, see the full list of today's drops from Swizzy's daily mint monitor. 

• Audibles (9:15 a.m. ET)
• Project FADA (12:00 p.m. ET)

Enjoy this write-up? Follow along with me on Twitter @tyler_did_it or reach out via email tyler.warner@luckytrader.com.

For all volume and floor price data, see Lucky Trader's Project Rankings page.

For all upcoming mints, see Lucky Trader's NFT Calendar page.