Bored Ape NFTs drop to $3M in a day

Bored Ape NFTs drop to $3M in a day

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

A single large holder of Bored Ape Yacht Club NFTs has sold 27 of them in the past 24 hours, worth nearly $3M.

The BAYC's market value has been significantly reduced over the past couple of days, resulting in the collection's market capitalization slipping from CryptoPunks to CryptoPunks, which is now the most valuable NFT collection.

Franklin, the pseudonymous seller, cited an explanation for the sales. The collector, who is known as one of the biggest Bored Ape holders, said he sold the NFTs to pay off loans taken out on the BendDAO lending platform.

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

To Z, 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 overly exploited the Bored Ape Yacht Club ecosystem is, they said.

Z said traders are using more than 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 isn't just the Bored Ape NFTs that have dropped in value this week. In the past 24 hours, a well-known PFP collection, CloneX, is down 19%, according to analytics provider Nansen. As of April 14 BendDAO said that 11 of the tokens were available for liquidation.

In the past 24 hours, Pudgy Penguins, another well-traded collection, has fallen more than 9%, with eight of the tokens up for liquidation on JPEG. The downward price action across the board suggests that increasing numbers of leveraged NFT traders may experience their positions come under pressure.

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

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 had 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.

In the last week, the ETH has rallied over 5%, making the current 55.5 ETH value for Bored Apes around $113,000. When the floor was 60.8 ETH a week ago, ETH was trading around $1,870, meaning that the price of the floor has barelybudged in dollar terms.

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