Why Silicon Valley Bank Collapse Had Little Impact on Top NFT Art Projects, Report Says
By Anushree Dave
CryptoPunks, Bored Ape Yacht Club and other blue chip NFT art projects have remained unaffected by the collapse of Silicon Valley Bank
After a shaky 2022, where non-fungible token art projects saw a 97% loss in trading volume, the industry has been on an upward trajectory this year. The recent collapse of several US banks, including Silicon Valley Bank, has had little effect on blue chip NFT projects such as Bored Ape Yacht Club and CryptoPunks, according to a March 16 report by DappRadar, which tracks and analyzes decentralized applications.
“During the recent financial banking crisis, blue chip collections have proven to be a valuable asset class, maintaining their value despite market turmoil. This is especially true for collections like CryptoPunks, which have been recognized as securities and assets in their own right,” said Sara Gherghelas, analyst at DappRadar, in an email to MarketWatch.
“Over the past six months, the floor price of CryptoPunks has remained stable, comparable to the stability of stablecoins. The mature NFT market has also contributed to the growing recognition of the value and utility of NFT collections by consumers.”
The floor price is the price for the cheapest artwork in a collection.
Digital asset investments, which have long been seen as a risky asset, especially after the November 2022 collapse of crypto exchange FTX, have performed well following the collapse of Silicon Valley Bank, and the fall of crypto-friendly Signature and Silvergate Banks. Bitcoin , saw its best three-day performance since October 2019 earlier this week. Bitcoin investors have long touted it as an alternative to traditional financial institutions, including banks.
“It is clear that the NFT market is low correlated with capital and crypto markets,” said Pedro Herrera, head of research at DappRadar. “They remain largely unaffected because blue-chips have become the standard in this emerging market, and as such they create their own externalities. In the same way that art acts in economic crisis. On the other hand, it is also important to note that the teams behind blue-chips are becoming leading web3 brands, which are exposed to other types of systemic risk.”
But not all digital assets fare well. NFT trading volume more generally has fallen by 51% since the beginning of March, with the sales figure at 15.88%. With volatility in stablecoins, NFT traders have become less active, with Saturday seeing the fewest traders since November 2021, and the lowest number of single days in 2023.
-Anushree Dave
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03-16-23 1608ET
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