In the middle of a long-lasting NFT market downturn and a wider crypto market crisis, the Ethereum floor price of the Bored Ape Yacht Club (BAYC) NFT collection has dropped to its lowest level since the beginning of the year.
The floor price of Bored Ape Yacht Club NFTs has dropped to 65.68 ETH, which is the same as what it was on January 2, 2022. Stats from CoinGecko show that it has been going down since May 1, when it hit an all-time high of 153.7 ETH.
BAYC is still the largest NFT collection, with a market cap of 656,800 ETH, just ahead of CryptoPunks, which has a market cap of 655,000 ETH and a floor price of 65.5 ETH and is its closest competitor.
But there is good news for people who own Bored Ape. The BAYC floor price is now around $107,000, which is less than what it was at the beginning of the year, when it was just under $256,000, but more than what it was in June, when it was just under $87,000, because of how the price of ethereum changed.
Bored Apes, which were bought with loans from the peer-to-peer lending platform BenDAO, may need to be sold because the collection’s floor price is going down.
With BenDAO, users can borrow up to 40% of an NFT’s floor price. This is possible because BenDAO lets users borrow ETH in exchange for NFTs. If the loan isn’t paid back and the NFT’s floor price falls to the point where its “health factor” is less than 1, the NFT is sold to the highest bidder in a 48-hour auction.
The health factor is described as “a number that shows how safe your deposited NFT is compared to the borrowed ETH and its underlying value.”
The Bored Ape Yacht Club right now The health factor for NFTs on the platform is less than 1.2. This puts them in the “danger zone,” where a drop in the price floor could cause them to be liquidated. The news of the possible liquidations came from the NFT trader Cirrus.
“Short-term swings in NFT floor prices are natural,” says BenDAO. “Consensus on bluechip NFTs didn’t form in a day, and it won’t fall apart in a short amount of time.”
According to the platform’s paperwork, it only has a temporary floating loss and no real losses. However, it doesn’t say what would happen if there was no buyer and the value of the NFT dropped below the value of the interest-bearing debt.
The BAYC floor price is now 57% lower than its all-time high, which was set in May, and 2.57% of the BAYC collection is tied to BendDAO, so this question could become very important.
NFTs like BAYC, which are traded for ETH and use the Ethereum network, tend to follow the price of Ethereum.
When Terra’s algorithmic stablecoin UST crashed in May and when hedge fund Three Arrows Capital and cryptocurrency lender Celsius Network both went bankrupt in June, Ethereum’s value dropped by 43%.
In the same amount of time, from May to June, BAYC’s floor price went from 116 ETH to 65.5 ETH, a 36% drop. But as investors get ready to profit from Ethereum’s upcoming Merge, NFTs have fallen behind the second-largest cryptocurrency by market value.
As BAYC’s floor price continued to go down, Ethereum went from a low of $995 eight months ago to a high of $1,634 between June 19 and August 20.
Latest NFT News, Trendings and Tutorials, right at your inbox, every Monday Leave this field empty if you're human: