NFT Weekly Preview | Surviving the Crash?

NFT Weekly Preview | Surviving the Crash?

In what feels like a near-catastrophic backdrop of stock markets, real estate, and global currencies starting to crash, along with a growing nuclear war threat, NFTs and crypto are holding up surprisingly ok?

This past week saw the S&P 500 drop 5 percent, the British Pound drop 5 percent to $1.09 (going as low as $1.04 last night before futures markets were halted), the Euro fall to $0.97, and US home mortgage rates rising to 6.2% as doom-posters seemingly take over the Twitterverse. The macro backdrop feels as bleak as ever, and market participants are positioned as short as ever, as SPY puts reach record levels.

Amidst all of this doom and gloom, crypto and specifically NFTs are holding up surprisingly well. BTC and ETH essentially held on the week, down just 1% each at $19.1K for BTC and $1,320 for ETH. NFT-related altcoins were actually up on the week, led by $APE at $5.50 (+8.2%), $SAND at $0.85 (+3.2%) and $AXIE at $12.44 (+3.2%). Granted all the coins are down 10-20%+ from local highs ahead of the Merge (quickly becoming a distant memory), but still, a week of chop was a welcome surprise.

NFTs were another story together. Of the top 40 NFT projects by floor price (essentially all above 5 ETH floor), 25 were even or in the green on the week. And these were not just single-digit gains - most of these were up 10-20 percent or more on the week. The numbers look even better on the 30-day view - 29 of the top 40 are even or in the green. This has been a really nice stretch of quiet floor increases, with a relative lack of major news.

Weekly volume seems to have mostly stabilized in the 70-100K ETH range since August, still down from June and July by about 50 percent though it's no longer a straight line down. In fact, this past week saw ~85K ETH in volume across marketplaces, the highest weekly total in 10 weeks (per data from Nansen.ai).

Users per week have also mostly stabilized in the ~150K/week range for OpenSea, and as high as 250k/week across all ETH platforms. It may feel quiet on NFT Twitter, but the number of active traders really is not down that much. 

There was also some bullish news from major brands and companies in the past week, as Apple announced that it will allow apps selling NFTs within its app store with potential reach into the billions. Then Disney said, "hold my beer" as news spread that they were hiring a transaction lawyer to "aggressively" pursue NFTs and DeFi (perhaps a decision made by their recently appointed Chief Metaverse Officer). 

Major brands and companies just keep rolling into NFTs and the metaverse, and that trend is not slowing down anytime soon. But it does not translate to our bags, at least until thousands of new users are onboarded and/or daily volume doubles or triples. 

So what has been the catalyst of all the green on the board this past week/month? It's hard to pinpoint exactly, but my gut feeling is it's a simple re-pricing in USD. ETH is down 10 percent on the month and closer to 25 percent from local highs, and every time it dips hard, NFTs seemingly reprice (at least the good ones). That's why I do think there's a real shot that if ETH does crash to triple digits along with a broader market event in the coming days/weeks that it will likely be a bullish catalyst for NFTs in ETH terms, as we will see another re-pricing. 

Let's take a closer look at some of the bigger moves from the past week.

NFT Weekly Market Analysis

The Yuga ecosystem absolutely dominated the board this past week, seeing a ~50 percent uptick in volume across BAYC and MAYC, as their floors surged 14 percent and 17 percent respectively to 83.4 ETH and 16.1 ETH. A portion of the early week momentum was perhaps related to the Twitter Spaces scheduled for this past Thursday to announce $ape staking details, which was delayed but did reveal that staking begins on October 31. 

BAYC is now 20 ETH ahead of Punks, currently stuck in the low 60s at 64 ETH, cementing their spot as the most sought-after PFP at least in this current market. Otherdeeds continue to lag, holding steady at 1.7 ETH floor, though it continues to be a big question as to what catalyst could really move the floor of this 100k set for more than a few days (and also raises the question of metaverse NFT values, but we'll save that one).

Azuki was the next headliner on the week, as their much anticipated 9.23 announcement finally landed late Friday evening as "The Ruins" debuted as the next phase of the Azuki world/lore building. Unfortunately for the floor price, the market did not like this news or else expected more, as there has already been a 33% retrace from local highs of 12 ETH back to a 9 ETH floor this morning. It's not really clear that any announcement will be bullish for a major set in this market, and this was just another reminder of how difficult it is to manage NFT participant expectations right now.

Other notable movers included the DigiDaigaku ecosystem, which saw the Genesis + Spirit floors move past 20 ETH at high, settling at 19 ETH across the two as of this morning as Spirit burning is now live. Cool Cats jumped 28 percent on the news of their new CEO Stephen Teglas being appointed, and Renga was up ~50 percent from local lows around 0.8 ETH as it bounced back to 1.2 ETH floor.

In art market news, Squiggles jumped 12 percent on the week to 11.4 ETH, but the headliner was Fidenzas which benefited from a sweep of 7 off the floor from a whale and saw the floor move 18 percent from 85 to 99.9 ETH on the week. This may very well have been in anticipation of Fidenza artist Tyler Hobbs dropping his next notable project QQL here this week - a great segue into our upcoming focus.

Here are this week's new drops to watch:

  • QQL from Tyler Hobbs
  • Monsterland
  • Art Blocks Factory 

Let's dive into each one.

QQL from Tyler Hobbs

In what may be the biggest launch of Q3 '22, Tyler Hobbs is back with new partner Dandelion (Archipelago co-founder) for his latest generative art project QQL. 

QQL is a very different approach than Hobbs' previous works, with a heavy focus on community curation. Hobbs calls the project "A collaborative experiment in generative art" on the project site, as it will indeed be the community members who "create" the outputs for this innovative set. Hobbs and Dandelion have created the algorithm, and the community takes over from there becoming "co-creators."

The project has created incredible hype over the past week through a clever contest put on by the founders, where everyone was encouraged to connect their wallets and begin creating sample outputs and sharing them on Twitter. Three judges will select nine winners who will each receive a free mint pass (minimum of 2 ETH value, likely much more).

Well while the winners are not yet known, the number of entrants is - and they are astounding. Over 11K submissions and 5.4M renderings from the algorithm - just incredible crowdsourcing and participation. To put that in perspective, OpenSea only has about 40K active weekly users - so ~25 percent participated in this contest.

The Dutch auction for the 900 available mint passes begins Wednesday, starting at 50 ETH and falling to 2 ETH over the course of an hour. Minting will open up Friday and will be open indefinitely.

The community co-sourcing here is such an interesting twist for this set, and while it has drawn a massive amount of attention, it is unclear how that will translate to the secondary market. Will there be demand for personal curation of mints in the open market? This mechanism has not historically performed well in the PFP market.

On the pros side, the nature of this algorithm allows for millions of permutations and the absolute best outputs to be minted, very unique from most generative sets which are bound to the primary minting window and its outputs. The contest also drove some personal connection to the outputs from those who participated, and now may be more likely to want to mint (and likely pay up for the right to do so). 

But on the cons side, Hobbs and Dandelion are likely previewing the future of generative art. Allowing the community to co-create is brilliant - but it certainly won't cost 2 ETH ($2,600) to do so in the future. The rise of AI and generative algorithms over time will almost certainly drive the cost to mint personal outputs to near zero, and thus this mint can feel expensive. And given the nature of this dutch auction, anyone who wants to participate will be able to do so - thus it's very unclear where secondary demand will come from. Thus most traders will sit this one out - good for collectors, but bad for liquidity.

Overall this is still a groundbreaking project and the main event of this week - get your popcorn ready.

Monsterland

Spooky season is here and there will undoubtedly be some Halloween-themed projects that have some brief runs over the next month. The first is set to drop here tomorrow as Monsterland debuts with essentially a free mint (allowlist and public are both below 0.01 ETH). 

Created by @DrJakobWagner, this project of 5,555 monster-themed avatar PFPs has amassed a huge Twitter following of 107K. While the website leaves a bit to be desired (essentially empty), the Twitter account does promise some utility in the form of "alpha calls". That's certainly not anything new, and likely worth the price of admission. But given the lack of new PFP mints this week, the Halloween theme, and the low entry, this one has a shot for a brief run this week - though it will be a surprise if any run has many legs.

Monsterland begins its mint on September 27 at 9 a.m. ET for the Whitelist, with the public sale at 1 p.m. ET.

Art Blocks Factory 

The success and hype of Hobbs' QQL very well may carry over into the Art Blocks mints this week, all Factory. There are three sets minting this week:

  • flora, fauna, false god & floods from Ryan Green - 400 supply, minting today at 1 p.m. ET (3 -> 0.15 ETH dutch auction)
  • Thoughts of Meadow from Eric Davidson - 150 supply, Wednesday at 1 p.m. ET (flat 0.3 ETH fee)
  • Interferences by Juan Pedro Vallejo - 256 supply, Friday at 1 p.m. ET (1.5 -> 0.15 ETH dutch auction)

Of these three, Thoughts of Meadow is likely the most interesting due to the 150 supply and Fidenza-like style. Fidenza-like outputs almost always play well in the generative art space, and low supply always helps. The outputs of the "flora..." set are great, but the supply is a bit high for Factory as is the final resting price of 0.15 ETH. 

Still, likely the most important factor in the secondary market success of any of these sets is who mints. Friday saw Arcadia mint out its 256 supply slowly over the course of an hour, seemingly without any botters or flippers participating. The art went into the hands of collectors, who didn't immediately list for 0.03 ETH profit - and guess what, the project saw major success on secondary. It ran from its 0.15 ETH min price to 0.4 ETH, a solid 160 percent gain for those who minted.

That success may mean that the flippers come back this week though, so be wary. As always there are multiple factors to consider when choosing to mint from a trading perspective, but if you enjoy the art - go for it!

Conclusion

It is shaping up to be a very volatile week, with multiple markets seemingly crashing and as bearish of a macro environment as seen in years. But amidst the chaos, NFTs seem to be fairly stable - a fairly shocking outcome. But hey, we will take it.

This week looks to be fairly quiet, with no major news expected from the PFP sector. Hobbs QQL will be the mint of the week, so expect major attention on that and perhaps a spillover into other Art Blocks sets.

The open runway does clear a path for any set that can capture attention to make a run. Renga is positioned well right now, and Bored & Dangerous has been gaining some momentum over the past week as well ahead of their eventual PFP launch with the Azurians. Yuga is always the X factor, and any roadmap announcements from them would dominate market attention.

Make sure to stay up to date with breaking NFT news with the Lucky Trader app and newsfeed! Have a great week, and stay safe out there!

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