Bored Ape Yacht Club NFT price drops 8%

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Bored Ape Yacht Club NFT price drops 8%

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

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

Over the past two days, the BAYC floor price has dropped by nearly 8%, putting the collection's market value behind CryptoPunks, which is now the most valuable NFT collection.

The sales were cited as the reason for Franklin, the pseudonymous seller. 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 anonymous trader who tapped into the Bored Ape market, notes that the price drop driven primarily by a investor underscores the fragility of the collection's position in the NFT world. It has also contributed to pushing more than 100 Apes into the Health Factor Alert List, which means they're 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 overleveraged the Bored Ape Yacht Club ecosystem is, said an analyst for The Defiant.

As a result, Z pointed out that traders are using over 1,000 Bored Apes as collateral for loans across three lending protocols, including 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, CloneX, another well-known PFP collection, is down 19%, according to analytics provider Nansen. As of April 14, BendDAO declared 11 of the tokens as available for liquidation.

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

The trader added that a program by the Blur marketplace has incented people to post bids for NFTs close to their floor price. 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.

The bids are essentially from users looking to buy BLUR tokens, making it 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 drama has centered on BendDAO. Last year, the team behind the project made emergency changes to its protocol as a dearth of bids on NFTs up for auction threatened to leave BendDAO with bad debt.

The ETH has rallied more than 5% in the past week, leaving the current 55.5 ETH floor for Bored Apes at about $113,000. A week ago, when the floor was 60.8 ETH, ETH was trading around $1,870, meaning that the floor price in dollar terms has barely budged.

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