NFT Weekly Preview | Penguins Eat Bears

In a week that started out poorly and then went from bad to worse, Pudgy Penguins were the shining light that may save the NFT market (or at least its sentiment).

Last weekend felt like max capitulation on NFT Twitter, as the mid-tier PFPs started tanking and then information on a potential liquidation spiral on BAYC started spreading. The week saw the trio of Azuki/CloneX/Doodles slip from 7-8 ETH floor range down to the 6 ETH range, each down about 10 percent on the week but ~40 percent on the month. 

Then BAYC started to fall, from a weekly high of 79 ETH down to 66 ETH at low (currently 68 ETH at the time of writing) as it became increasingly clear that several apes were going to be liquidated on BendDAO. The NFT lending protocol spent most of the week in the spotlight, highlighted by a "run on the bank" this weekend where depositors pulled all of the remaining ETH and forced an immediate change in the protocol mechanics.

Top NFT trader Cirrus has a great thread on the situation and its impact on the market, but the TLDR is that it will be very difficult for the top PFPs with the most supply in BendDAO to make any move up in the next month, as a large influx of supply is likely coming to the market and there is no sign of liquidity to absorb it. The timing is even worse with the pending Merge event, and popular sentiment to hold as much ETH as possible into that event. 

Not great.

But what could have been an entirely doom and gloom weekend was saved by Luca Netz and the Pudgy Penguin ecosystem. Last week, Luca and the Pudgy team dropped a flurry of announcements, including the launch of a new marketplace, the debut of its toy line, and then yesterday a star-studded advisory board.

The market responded resoundingly, with the Pudgy floor jumping over 60% on the week to 3.75 ETH at the time of writing (briefly hit 4.3 ETH on Sunday) and their fun companions the Lil Pudgy's up ~50% to 0.25 ETH floor.

The floor price doesn't even tell the whole story, as the Penguins seemingly took over NFT Twitter, with the cute PFPs popping up all over the place, a marathon "No Sleep til 4 ETH" Twitter spaces than ran for 10+ hours over the weekend (and worked!), and all of the major Crypto Twitter (CT) accounts narrating the whole thing. There was also an eventful KeyboardMonkey saga, where he sold his favorite Penguin, bought it back at a higher price just to lose it again from an outstanding listing, and then managed to get it back.

This run by the Pengu ecosystem seems to have turned around what was a pretty dark week for NFTs, but there were a few other positive headlines as well.

NFT Weekly Market Analysis

The Yuga ecosystem dominated trading volume on the week, seeing 10K+ ETH across the trio of BAYC/MAYC/Otherdeeds, even as their floors fell about 15 percent on the week. Punks were in fourth with ~2K ETH volume, also falling about 11% on the week to 66.45 ETH, staying just a notch below the BAYC floor (though the re-flippening feels inevitable).

The Pudgy Penguins were 5th on the board with 1950 ETH traded (well documented above). One major takeaway from this run is that it all happened with just 2k ETH volume - imagine if real volume starts to move to the Pudgy ecosystem, with how little sell pressure there is right now. This is certainly one of the top ecosystems to watch in the near future. 

DigiDaigaku's were one of the biggest winners of the week, with their floor jumping ~100 percent to 2.7 ETH after founder Gabriel Leydon teased an airdrop for holders for this week. The team from Limit Break has upped their communication from a fairly quiet beginning, and the project is building some real momentum in this airdrop event which will be a major liquidity focus for this week.

Potatoz had a solid week as well, rebounding 15 percent to 1.35 ETH as their first week of staking started today. They have some fairly strict requirements with how their staking/raffles will work, and listings are down to an absurd 165 (1.65%) at the time of writing. That listing supply will be a key metric to watch here over the next few days because if it stays low and any buy pressure comes in at all, this set could really move. 

A few other notable winners on the week included Finilar, which jumped about 100% from its local low of 0.08 to 0.16 ETH in a post-reveal come back, Grails 2 up 20% to 4 ETH ahead of its reveal this week, and then 8liens up 44% from last week to 0.17 ETH (rebounding nicely from local lows around .06 ETH).

A major loser of the week is Isekai Meta, which saw its floor run to 0.4+ ETH ahead of its reveal event but fell fast this morning to 0.2 ETH at the time of writing. Rare Apepes continue their decline, falling another 27 percent to 0.43 ETH. And of course, the fall of the mid-tier PFPs was highlighted above, but Doodles, CloneX, and Azuki are now at just 6.7, 6.06, and 5.97 ETH floors (down 70-80% from highs).

So what to make of all of this?

Volume remains at the lowest levels of the year, though it seems to be leveling off in USD terms in the $14-$15M/day range. It's hard to see the catalyst for any top or midtier PFP to make a run in the next few weeks (other than maybe Moonbirds with its Future Proof event on Aug 30). So attention will likely focus elsewhere, like the Pudgy eco and the low cap sector. 

This might actually be good for new projects dropping, and there are some big-name ones coming this week.

On the radar for this week:

• PUMA Nitro
• Recur's Hello Kitty
• Art Blocks Curated: Polychrome Music

Let's get into it.

PUMA Nitro

PUMA is launching headfirst into NFTs this week with a two-part event, first with the mint of its Nitro Token on the 21st-22nd and then its Nitropass coming on the 26. The Nitro Token, which was a free mint for holders of the Catblox x PUMA NFT as well as winners of a PREMINT raffle, will be burned in exchange for the Nitropass.

The Nitropass then becomes the primary NFT of the PUMA ecosystem, which "will unlock access to PUMA’s Web3 community, premium experiences, and drops." The team teased that there will be two designs for the Nitro Pass, though not much else is known.

Market action has been light thus far, with 70 ETH traded and a floor of 0.12 ETH as 2800 of the supply is out. This should pick up a bit, once the full 4k NFT supply is out in the market and ahead of the Nitropass launch, especially as more information is revealed about what holders can expect for the first few drops in the PUMA ecosystem. 

Recur's Hello Kitty

The other major cat project this week comes from the Recur ecosystem, which is launching its heavily anticipated Hello Kitty collection. The last few Recur drops (Nickelodeon Rugrats, Care Bears) were just a warmup for this one, as the cult cartoon from Sanrio makes its NFT debut.

Starting on the 24th, 10,000 suitcase NFTs will be available for purchase for $100 each. The sale is conducted in three parts, a RECUR special allowlist sale, then Recur Pass general sale, then a public sale happening at 11 a.m. ET on the 14, then at 1:00 and 2:00 p.m. ET on the 25th.

There will also be an auction on the 23rd for 6 "out-of-this-world" Hello Kitty NFTs, starting at a 10 ETH dutch auction price, ahead of the larger collection sale on the 24th. The price action on the 6 1/1s should be a nice indicator of the top-end interest for this set ahead of the mint.

The Recur pass allowlist has these eligible passes at a $600 floor at the time of writing, providing some insight into the expected market value of these NFTs ahead of mint. With the Rugrats NFTs reaching a 0.4 ETH price at peak (though falling hard after), there will be some real upside potential with this set, and expect a lot of demand on the mint. This should be one of the better flip opportunities of the week, and the alpha groups all know it - so it won't be easy.

For more info on the drop, check out the team's Travel Blog on the website.

Art Blocks Curated: Polychrome Music

The latest Curated project out of Art Blocks is an animated, musical set of 400 from Rafael Rozendaal and Danny Wolfers. Rafael is not new to Curated, having dropped a solo collection "Endless Nameless" last summer (currently 0.42 ETH floor), as well as two Playground sets which have seen some real success in Dive (0.66 ETH floor), Corners (1.08 ETH floor), and Non Either (3.1 ETH floor).

This generative set inspired by early computer chips plays "an infinite composition" to go along with the colorful block animation. Each time the piece is played, the system changes the music pattern, making it unique. From the project preview page "In essence, the system infinitely randomly remixes the source melodies to create ever new surprising pieces that harmonize with the colorful compositions."

Art Blocks tailwinds are pretty bearish overall with most floors down, but good projects are still minting out (see last week's 80s Pop) and the last Curated "Fake It Til You Make It" saw a recent recovery from its lows of 0.2 back to 0.4 ETH. The low supply of this one, combined with Rafael's prior project's success, makes this one interesting especially if it goes below 0.5 ETH. On a market cap basis, this set should be in line with Endless Nameless, meaning its implied floor would be ~1 ETH. If it mints out there, there's less upside but if the line holds to 0.6 or lower, this becomes a much more enticing mint.

As always, the entry price is everything - unless you're just in it for the art, and then by all means mint away.

Conclusion

Overall the bear market pain continues, and there is no end in sight for most of the PFP sector.

The crypto markets will likely have a say in how this week goes, though it's becoming hard to predict how ETH volatility will impact the NFT markets. Macro sentiment seems to be getting more bearish, as inflation reality sets in along with some bad energy news out of Europe. Bad macro and volatile ETH is a rough backdrop for NFTs.

But each week, there continue to be some great opportunities for gains for those paying attention to the market and major news events. Just last week, Digidaigaku jumped 100 percent on its airdrop announcement, and Pudgy Penguins ran up more than ETH on the back of their toys announcement (and some heavy CT touting). The week before, there were several similar opportunities.

So good trades are still out there, for those with patience and who pay attention. As always, stay up to date with breaking news and announcements across the NFT space with Lucky Trader newsfeed. 

To those minting and/or trading, be safe out there, and good luck this week!