Bored Apes drops 8% when the main holder exits
Over 1,000 BAYC NFTs are pledged as collateral for lending protocols
A single large holder of Bored Ape Yacht Club (BAYC) NFTs has sold 27 of them, worth nearly $3 million, in the last day.
Over the past two days, the BAYC floor price has fallen by nearly 8%, pushing the pool’s market cap below the market cap of CryptoPunks, which is now the most valuable NFT pool.
Franklin, the pseudonymous salesman, cited an “IRL [in real life] problem” as the reason for the sale. The collector, long 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.
To Z, a pseudonymous trader who took advantage of the Bored Ape market, the price drop driven primarily by one investor underscores the fragility of the collection’s position in the NFT world. “Seeing the effect a user liquidating 20 monkeys has on the liquidity and bid levels shows that if there was a true capitulation event, it could all come crashing down,” the trader told The Defiant.
Bored Apes rocketed to success seemingly overnight when they launched in 2021. They became the poster child for NFTs, with Paris Hilton showing off hers on late night and Rolling Stone magazine putting a monkey on its cover during the height of NFT mania.
BendDAO loan
The lower prices of the NFTs also affect other traders on BendDAO – with the lower value of chained monkeys with collateral, the relative value of ETH borrowed against these assets increased. With 402 of the now cheaper tokens on the platform, there are many traders with positions trending towards liquidation.
This has pushed three Bored Apes into the auction process on BendDAO as of April 13. It has also helped push more than 100 monkeys onto the Health Factor Alert List, meaning they are close to being liquidated through the auction process.
To Å, the whole drama highlights the number of people borrowing against the NFTs, which are worth around $113,000 a piece as of April 13. “It shows how handed down the Bored Ape Yacht Club ecosystem is,” they told The Defiant.
Exploited monkeys
In fact, Z pointed out that traders use over 1,000 Bored Apes as collateral for loans across three lending protocols, including BendDAO, JPEG’d, where traders borrow against 38 Bored Apes, and ParaSpace, where traders borrow against 625 of the tokens. .
It’s not just the Bored Ape NFTs that have fallen in value this week. CloneX, another well-known PFP pool, is down 19% in the last 24 hours, according to analytics provider Nansen. BendDAO lists 11 of its tokens as available for liquidation as of April 14.
Pudgy Penguins, another well-traded collection, is down over 9% in the past 24 hours, with eight of its liquidation tokens JPEG’d. The downward price action across the board suggests that increasing numbers of leveraged NFT traders could see their positions come under pressure.
Breeding with blurred bid
The trader also pointed out that a Blur market program has encouraged people to bid on NFTs close to the floor price. This has made it much easier for traders to unload their assets than usual – without the help of an incentive program like Blurs, it is not always possible to find buyers quickly for a large number of high value NFTs.
That these bids are mainly from users looking to farm BLUR tokens makes it much more likely that the buyers will turn around and download the NFT they end up buying at the next, lower bid.
This is not the first time drama has centered around BendDAO. Last year, the team behind the project made emergency changes to its protocol when a lack of bids for NFTs at auction threatened to leave BendDAO in bad debt.
Amidst the drama, ETH has rallied over 5% in the past week, making the current 55.5 ETH floor for Bored Apes roughly $113,000. When the floor was 60.8 ETH a week ago, ETH was trading around 1,870 dollars, which means that the floor price in dollars has barely reached.
Still, with the debt denominated in ETH, leveraged traders can’t afford to see Bored Apes fall too much.
