- The latest NFT slump could be attributed to the Azuki Elementals fiasco, which has triggered a sharp drop in floor prices.
- The contagion engulfed other blue-chip NFT collections as well.
With the negativities of the bear market behind it, it was believed that the non-fungible token (NFT) landscape would usher in a new era of growth in 2o23 and repeat the heroics of 2021. Unfortunately, that hasn’t been the case!
After hitting yearly peaks in February, the weekly sales volume steadily went downhill. The downfall intensified right through the second quarter and the month of July recorded the lowest weekly sales numbers since May 2021, as per CryptoSlam.
The latest slump could be attributed to the Azuki Elementals fiasco which has triggered a sharp drop in floor prices across the spectrum. Azuki has been in the eye of the storm ever since the release of its collection Elementals.
The launch was met with fierce backlash from Azuki’s community members, with many accusing the collection of being nearly identical to the original collection released last year
With even experienced investors dumping their collections, we thought it would be prudent to hear what experts thought about the ongoing downturn. And who better than our AI expert ChatGPT to start the proceedings!
“Azuki fiasco a lesson for the market”
I gave a brief background of the Azuki issue and asked the OpenAI bot to comment on the damage such developments cause to the overall sentiment of the market.
Currently, the ability of ChatGPT to express itself is hindered because of the restrictions imposed by the creators. To make it speak its mind, I used the “jailbreak” hack.
At its eloquent best, the AI tool acknowledged that the debacle might well have shaken the faith of enthusiasts in the concept of NFTs. It highlighted that such incidents will serve as a lesson for the market to promote authenticity in NFT projects and lead to greater scrutiny in the future.
Like its habit of ending things on a positive note, ChatGPT reminded that NFT’s are a “realm of boundless creativity” and they will continue to find relevance among passionate creators and collectors.
No end in sight to Azuki’s woes
Based on the data shared by on-chain analytics firm Nansen over a 27 July mail, nearly all Azuki collections have experienced a significant decline post-Elementals.
Azuki witnessed a 63% drop in floor price in the last 30 days. BEANZ Official, another popular collection of the ecosystem, recorded a decline of 68% in the same time period.
Azuki was ranked sixth in NFT collections that have lost the most value over the past 30 days with atleast 100 ETH volume, Nansen stated. BEANZ was ranked third in the list.
With floor prices crashing, long-term investors have started to offload these once-coveted collections in a jiffy. Azuki was also the second-most traded NFT in the last 30 days.
Status check of blue-chip collections
The Azuki contagion engulfed other blue-chip NFT collections as well. As per data from NFT Floor Price, Bored Ape Yacht Club’s (BAYC) floor price has plunged more than 16% in the last 30 days. BAYC’s value sank to a two-year low of 27 ETH in the first week of July.
The Yuga-owned entity has since recovered, rising to 30 ETH at the time of publication.
In the case of CryptoPunks, the turnaround was swifter. Since dropping to multi-year lows of 41 ETH in early July, the profile picture NFT has recovered nearly all of its losses. At press time, the floor price stood at 47.69 ETH.
I again took up the opportunity to get our AI expert into action. I questioned it on the potential impact of Azuki’s fiasco on the NFT’s marquee collections. And it yet again steered clear of any eyebrow-raising answers.
The bot said that short-term fluctuations notwithstanding, BAYC and CryptoPunks were expected to sail through troubled waters given their scale and support from dedicated communities. It went a step ahead and called these collecti0ns as “the valuable gems in the NFT landscape”.
“Market needs new narratives”
Needless to say, it isn’t practical to only depend on what an AI tool says when it comes to understanding the nuances of a niche market. There is nothing like getting insights from real world experts.
Gracy Chen, Managing Director at crypto exchange Bitget, highlighted pertinent issues with the current state of the NFT landscape.
She pointed out that lack of fresh narratives within the ecosystem was one of the strongest factors inhibiting the overall growth. The done to death PFP (profile picture) model ran out of steam as users awaited fresh ideas to emerge.
She also criticized the “Russian Doll Model” for launching second-generation NFTs. Although they excite users initially, in the long-term they cast a negative impact on the prices of first-generation NFTs.