DappRadar report shows decline in NFT trading after SVB crash
Three cases of bank collapse have recently occurred and affected the NFT market. These banks include Signature Bank, Silvergate and Silicon Valley Bank. This event was the result of strict regulations, an economic downward trend, a liquidity crisis and the failure to fulfill customers’ withdrawal requests.
Following the recent collapse of digital bank Silicon Valley Bank (SVB), DappRadar reported a significant drop in trading volume for non-fungible tokens (NFT).
SVB collapse impact on NFT trading volume
According to data aggregation platform, DappRadar, the SVB collapse has sent shockwaves throughout the cryptocurrency industry as investors begin to reassess their risk exposure to various digital assets. The event brought the total number of non-fungible tokens traders to the lowest value since November 2021, falling to around 11,440.
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The report of DappRadar stated that trading volumes of NFT fluctuated between $68 million and $74 million before the fallout of Silicon Valley Bank on March 10. As of March 12, the figure fell to $36 million. The decrease in trading volume was a 27.9% decrease in daily sales of non-fungible tokens recorded between March 9 and 11, 2023.
Until now, Silicon Valley Bank was seen as a key player in the non-fungible token market, providing critical financial infrastructure and investment capital to various projects. With the sudden collapse, many NFT projects are now struggling to secure funding and liquidity, which is the main reason behind the drop in trading volumes.
The report also highlighted the impact of the broader downturn in the cryptocurrency market, which has seen major assets such as Bitcoin and Ethereum lose significant value in recent weeks.
This event may have caused many investors to shift their focus away from riskier assets such as NFTs to more stable assets such as gold and government-backed currencies.
The report added that in response to the decoupling of the USD Coin token, trader attention had moved away from the non-fungible token market as it fell to $0.88.
Blue Chip market value remains intact
The decline in NFT trading volumes did not affect the value of blue-chip non-fungible tokens. Despite the recent decline in NFT trading volumes, the value of blue-chip NFTs remains unaffected, based on market monitoring.
Blue-chip NFTs are advanced digital assets that have retained their value even as the overall NFT market experienced a downturn. While total NFT trading volumes are down to $36 million, blue chips including CryptoPunks and Bored Apes Yacht Club (BAYC) have maintained value, although there was a slight decline in their prices.
According to Greg Solano, co-founder of Yuga Labs, the company’s financial status is not overly exposed to Silicon Valley Bank. This may account for the immunity of these blue chip non-fungible tokens to the declining trading volumes in the broader non-fungible token market.
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Apart from this, blue-chip non-fungible tokens provide a unique opportunity for creators and artists to monetize their work in the digital age, creating a new revenue stream at a time when technological advancements have disrupted traditional revenue streams.
Based on DappRadar’s report, the fallout of Silicon Valley Bank and Signature Bank has dramatically affected the crypto industry, especially the decentralized application ecosystem. These events have increased the need for the digital currency space to rely less on the mainstream banking infrastructure and become more self-sufficient.
Featured image from Pixabay and chart from Tradingview.com
