NFT Weekly Preview | Grail SZN and Open Questions

Sunday closed one of the most exciting weeks in NFTs in a long time, providing glimpses of bull market vibes. The action was punctuated by some massive grail sales in the Yuga ecosystem and a very successful drop from top generative artist Tyler Hobbs.

The highlights from this week included

• Tyler Hobbs seeing his QQL drop mint out at a staggering 14 ETH level and raise 12,600 ETH in the primary sale (it's done ~5k ETH on secondary as well)
• Two massive CryptoPunk sales from holder "Seedphrase" on his Hoodie Ape punk (3,300 ETH) and Zombie Mohawk punk (980 ETH)
• Two major BAYC eco sales as Trippy King BAYC sells for 777 ETH and "Noise" M3 MAYC sells for 1,000 ETH

Those three project ecosystems combined for ~25K ETH in overall volume, which helped raise the overall weekly volume to ~98K ETH - the highest weekly total in 10 weeks.

The market success was not just focused on the higher-end projects, though, as it was a great week for some newcomers and lower-end sets. Let's take a closer look at the week.

NFT Weekly Market Analysis

Putting the Yuga ecosystem and QQL aside, the top story of the week was Renga which caught absolute fire and saw the revealed floor run from ~1 ETH to ~3 ETH over the course of the weekend. The unrevealed Renga Black Boxes surged 85 percent on the week to 4.3 ETH, touching 5 ETH briefly on Sunday. Not only was Renga the focus of the market volume, but it was also the main focus of NFT Twitter, which seems to be pretty heavily divided into pro-Renga and Renga-FUD camps. 

The primary bull case for Renga seems to be threefold: whales are buying in huge amounts and mostly holding (Dfarmer, Dingaling); people generally like the art from Dirty Robot; there has not been much else to trade in the PFP sector, thus they have been able to maintain attention for a longer period of time. The bear case is that it's still not catching much PFP-traction on NFT Twitter and listing percentages remain pretty high around 20 percent - putting into question the motives of recent buyers (true community members vs flippers). More on this below.

One project primarily moved in the wake of the Renga run up and that was Gangster All Stars (GAS), which employs a similar black box to reveal the mechanism and saw its floor jump 73 percent on the week to 0.4 ETH. It will be a tall task for GAS to pull off the same run that Renga did (especially as the second mover in a new style never performs as well), but the move was exciting nonetheless.

There were some big success stories in the low cap sector this week as well, as Kitaro World moved from a sub-0.01 ETH mint to 0.28 ETH over the weekend, and the latest free-to-own (F2O) gaming NFT Azra - The Hopeful ran from free to 0.3 ETH. Each project caught some meaningful volume, but now is faced with the big week 2 test and if they can maintain relevancy.

Back at the top end of the market, the Yuga ecosystem did not see its floors move along with the grail sales, a trend that seems unique to the bear market (in the bull market these types of high-end sales were major catalysts for floor moves). The Punks floor dropped 1.5% on the week to 63 ETH, while the BAYC floor dropped 4 percent to 79.9 ETH and MAYC dropped five percent to 15.3 ETH. Other top-end PFPs did a bit better, with Azuki up 10.5% to 10.4 ETH after being briefly delisted from OS, Doodles up eight percent to 8.5 ETH, and CloneX up five percent to 6.6 ETH.

The other major but net negative news on the week came from the Jenkins ecosystem and Bored & Dangerous, which previewed their Azurian PFPs to immediate backlash. The floor tanked from ~0.6 ETH to 0.3 ETH in the 1-2 hours post-preview and has not yet recovered. The team did take the feedback in stride, jumping on an emergency Twitter Spaces and vowing to fix the art (and delaying the mint in the process), but some damage has already been done. More below on what this team is now facing and if they can recover. 

Looking forward, there are some big open questions to be answered which will likely drive the market focus this week.

• Will grail sales continue?
• Can a PFP project have success without widespread PFP usage? 
• Does this NFT market give second chances? 
• Can QQL maintain momentum without secondary action?

Will grail sales continue?

Markets are seemingly collapsing around the world in the macro backdrop, yet whales are still buying up rare NFTs for thousands of ETH. Relatively cheap and stable ETH ($1,320 at time of writing) is likely a boon for the top-end NFTs, as it creates very attractive USD-based entry points for those that are stabled as well as traditional ETH whales (lower tax bills on the buy side). The elite Punk floors are fairly high, with Aliens at 8,800 ETH floor, Apes at 3,500 ETH, and Zombies at 1,400 ETH at the time of writing, thus market buys are unlikely. But more offers seem to be floated around, and it would not be surprising at all to see another grail move (Zombie would be most likely). 

A more interesting question is what this means for the gold ape BAYC market after the trippy king moved for 777 ETH. Several seem to think gold is next to move and that it won't do so for less than 1K ETH. With the floor at 1,200 ETH for golds, it will likely take an offer in the 1k range to catch a sale, but it definitely feels more live than it has in weeks.

The other interesting aspect of this grail PFP movement is that we have not seen the same in digital art or generative space. Grail 1/1s or Fidenzas haven't been moving - yet. This feels like the next potential sector to catch some major bids here in the near future, especially as whales paid up big time for QQL mint passes, showing that big money is on the sidelines and still puts a big value on top-quality art. And rumor has it Grant Yun is dropping some new piece(s) this week...

Can a PFP project have success without widespread PFP usage? 

The Renga run-up is putting this question back in the spotlight, and it may be the single most important question for the PFP sector.

As mentioned above, the primary bear case for Renga is that there are not that many Renga PFPs out there (just 480 according to data from NFT Inspect) which has them ranked 72nd for PFP projects.

For reference, similar floor price projects such as Pudgy Penguins have 1700+ PFPs and Cool Cats have 3000+. Even Goblins which anecdotally seem to have lower PFP usage are sitting at 2,300.

Does this metric even matter? It certainly feels like it does, as attention is one of the most important factors in NFT project success and widespread PFP usage helps drive that attention exponentially. But the challenge is - most existing NFT traders have their PFPs set and are encouraged not to change them (especially for those trying to build a Twitter brand). So to reach critical mass PFP usage, new projects will require new users OR to convert from other communities. A tall task in this bear market.

Regardless, Renga success or retracing will be the next major test of the PFP market and if new projects can succeed without heavy PFP usage. And those in the Gangster All Star market and Bored & Dangerous should be watching closely, as they will be in a very similar situation soon.

Does this NFT market give second chances? 

Speaking of Bored & Dangerous, they have their own set of challenges after the disastrous Azurian preview from last Friday and now face the question - will they be given a second chance?

Typically if an NFT project has a bad art reveal and it dumps, it never recovers. The wise thing that the Jenkins team did here made this a preview vs an actual mint, giving themselves a chance to course correct. So they can improve the art and avoid a disastrous reveal event.

The other major "second chance" story that comes to mind is Azuki. Azuki famously dumped hard after it was revealed that founder Zagabond had been tied to three previous projects, some of which had rugged. But it bottomed and has recovered, up ~50-60 percent from local lows and the community seems nearly as strong as ever.

That is the theme that B&D will need to rally around - a strong community. And so far it looks very strong, given the reactions and support that poured out for the Jenkins team and founders over the weekend in the wake of the Friday disaster. 

So it seems there is some precedent for a comeback if the community remains strong enough. But some big damage has already been done, and a comeback will not be easy. And even with a great new art reveal, B&D will face the same open question above that Renga is facing, as most of the hardcore community members come from the BAYC eco and thus already have set PFPs.

Can QQL maintain momentum without secondary action?

The QQL mint pass market action has been astounding, with the mint pass selling 900 at the 14 ETH min price and then rocketing another 50% on the secondary market to a peak around 22 ETH by Friday. But then on Friday, minting was opened and about 90 mints have been created - with just one sale on OpenSea (a 10 WETH offer acceptance). Not great. This lack of volume has likely been the driver of the mint pass floor dropping back to 16 ETH this morning, down 30% from local highs.

The QQL output floor is now at 16.5 ETH with the highest offer at 10.3 WETH, and there is no indication that buyers are coming any time soon. And why would they, when they could simply buy a mint pass and create their own outputs?

This was always the challenge with this set and the idea of personal curation - there's little incentive to buy someone else's output. The upside is that the crowdsourcing will lead to millions of algorithm iterations and thus the most elite grails will be found and minted - and perhaps those will catch some secondary attention. But for more "normal" outputs, there will likely be no demand.

Thus the most likely outcome is that the mint pass will continue to trend down unless some secondary buy action comes through - and that does not seem too likely, at least in the near term.

Conclusion

Overall it was a very exciting week and the market felt fun again. Now we will see if this will be a "hangover" week or if the momentum can continue, in a week without any major drops (the Art Blocks Curated on Wednesday is likely the highest profile of the week). 

There is some concern about market crashes and rising tensions in the UKR-Russia war, both of which are major X factors that could impact the NFT market. But if crypto can remain somewhat stable, we should expect to see some similar runs in the low cap sector this week and perhaps some new grail action in the art sector. It will be fun to watch.

As always, stay up to date with the latest news from the Lucky Trader app and newsfeed. Stay safe out there, and happy minting!