If prices are falling in an illiquid market, how quickly before anyone notices?
While fungible tokens traded on centralized and decentralized exchanges have significant transparency regarding price movements, non-fungible tokens can be more difficult to track. Because of their illiquid nature, it can be difficult to gauge the sentiment of the overall marketplace for a project – a dynamic that has led eGirl Capital member Mewny to label NFT corrections as “silent crashes.”
I like the @ mewn21 phrase of the NFT crash as “silent crash”.
In liquid markets, you can see prices go down every day. In NFT countries, sellers are slower to respond to the market. Instead of sellers adjusting prices down every day for a month, they can go as low as -80% “overnight”.
– Tuba (@ 0xtuba) March 26, 2021
In a silent crash, speculators may not even be aware that one is afoot – buyers simply vaporize and sellers don’t move their goods. However, metrics such as “reserve price” – the lowest price an NFT can be bought for a given project – and total volume can indicate that a bull is transforming into a bear.
Bad news could also loom for NFT collectors as the signs point to a nasty crash.
One of the earliest and most popular NFT projects for collectors, CryptoPunks saw the minimum price drop over 40% to 14 ETH (approximately $ 28,000 at time of publication). Price capitulation has led to some horror stories up the chain today, such as a speculator who sold a punk for 16 ETH after buying it for 25.5 and another that was sold for 27.99 after buying 42 ETH :
Punk 8282 bought for 27.99 ETH ($ 57,228.07 USD) from 0xd3e2e7 from 0x691b87. https://t.co/NnobRb079D #cryptopunks #ethereum pic.twitter.com/rhXwiDraz6
– CryptoPunks Bot (@cryptopunksbot) April 3, 2021
CryptoPunks aren’t the only high profile project to see a market-wide correction either. Data from evalu.market shows that sales volume in several price categories for NBA Top Shot has declined sharply since a high on February 22nd.
A semi-anonical and self-described top shot enthusiast, Jordan, who set the steep fall downturn points at two specific populations.
“The market has been on a downward trend since February 22nd. It seems that there are two types of sellers. On the one hand, the investor who got on board early and wants to pay off with exponential profit. Second, the investor who has bought at or near the top and can’t stand to see their investment depreciate day by day, ”he said.
@topshotanalytix @economist @girldadNFT for everyone who would like to join TopShot in January instead of February. Well … welcome to January. pic.twitter.com/IY1TslV8I0
– ☄️☄️☄️☄️ (@jfresshhh_) April 3, 2021
Regardless of the project, it is difficult to watch the price floors drop. According to the market tracking website Nonfungible, the pullback is affecting the entire market: the total number of sales, total value of sales, and active wallets have all decreased on a 7-day and 30-day basis.
However, Jordan ultimately thinks this is a healthy, short-term retreat.
“I think it’s a healthy, relatively short-term correction. The rate at which prices rose from January 1st to February 22nd was unsustainable. I think the next few months will continue to be bumpy, but overall, I’m very.” optimistic. “