Bored Ape NFT price drops 8%

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Bored Ape NFT price drops 8%

More than 1,000 BAYC NFTs are pledged as collateral on lending protocols.

A single holder of Bored Ape Yacht Club NFTs has sold 27 of them, worth nearly $3 million, in the past day.

Over the past two days, the BAYC floor price has dropped by nearly 8%, pushing the collection's market capitalization below that of CryptoPunks, which is now the most valuable NFT collection.

Franklin, the pseudonymous Verkäufer, cited an account as the reason for the sales. The collector, long known as one of the largest Bored Apeholders, said he sold the NFTs to pay off loans taken out on the BendDAO lending platform.

The price drop driven mainly by one investor underscores the fragility of the collection's position in the NFT world, according to Z, a pseudonymous trader who tapped into the Bored Ape market. It's also contributed to bringing more than 100 Apes into the Health Factor Alert List, which means they're close to being liquidated through the auction process.

The whole drama highlights the number of people borrowing against the NFTs, which are worth about $113,000 apiece as of April 13. It's showing how overleveraged the Bored Ape Yacht Club ecosystem is, said The Defiant.

Z said traders are using over 1,000 Bored Apes as collateral for loans across three lending protocols, such as BendDAO, JPEG'd, where traders are borrowing against 38 Bored Apes and ParaSpace, where traders are borrowing against 625 of the tokens.

It's not just the Bored Ape NFTs that have dropped in value this week. CloneX, another well-known PFP collection, has decreased 19% in the past 24 hours, according to analytics provider Nansen. As of April 14th, BendDAO has announced that 11 of the tokens are available for liquidation.

Pudgy Penguins, another well-traded collection, is down more than 9% in the past few days, with eight of the tokens up for liquidation on JPEG. The downward price action on the board suggests that increasing numbers of leveraged NFT traders may see their positions come under pressure.

A Blur marketplace program has incentivized people to post bids for NFTs near the price of their floor price, he said. This has made it much easier for traders to unload their assets than is typical - without the assistance of some incentive programs like Blur's, finding buyers quickly for a large number of high-value NFTs isn't always possible.

So, that these bids are essentially from users looking to farm BLUR tokens, it's much more likely that the buyers will turn around and offload any NFT they end up buying onto the next, lower bidder.

This isn't the first time that drama has centered on BendDAO. The team behind the project made emergency changes to its protocol last year as a dearth of bids on NFTs up for auction threatened to leave BendDAO with bad debt.

The ETH has surged over 5% in the past week, making the current 55.5 ETH market value for Bored Apes roughly $113,000. When the floor was 60.8 ETH a week ago, ETH was trading around $1,870, meaning that the floor price in dollar terms has barely budged.

With ETH's debt denominated in ETH, leveraged traders can't afford to see their Bored Apes drop too much.