If prices plummet in an illiquid market, how long will it take for anyone to notice?
Although non-homogeneous tokens (NFT) traded on centralized and decentralized exchanges have significant transparency in price changes, non-homogeneous tokens may be more difficult to track. Due to the illiquid nature of NFTs, it may be difficult to assess the overall market sentiment of a project. This dynamic led Mewny, a member of eGirl Capital, to refer to the correction of the NFT market as a “silent crash.”
I really like Mewny calling the NFT crash a “silent crash”
In the liquid market, you can see price drops every day. In the NFT field, sellers have a slower “market response”. For a month, sellers have not adjusted their prices downwards every day, but may lower them by 80% “overnight”.
-tuba (0xtuba) March 26, 2021
In a silent crash, speculators may not even realize that it is happening, buyers evaporate, and sellers cannot transfer their goods. However, indicators such as “reserve price” (the lowest purchase price of a NFT in a particular project) and total transaction volume can all indicate that a bull market is turning into a bear market.
There may also be bad news for NFT collectors, because there are signs that a serious crash is happening.
CryptoPunks is one of the earliest and most popular NFT projects by collectors. Its base price has dropped by more than 40% to 14 ETH (approximately US$28,000 as of the publication of this article). Today, the price cut has caused some shocking events on the chain. For example, a speculator bought a Punk for 25.5 ETH and then sold it for 16 ETH, while another speculator sold it for 27.99 ETH. Punk:
Punk 8282 was purchased by 0xd3e2e7 from 0x691b87 for 27.99 ETH (57,228.07 USD),
CryptoPunks Bot (cryptopunksbot) April 3, 2021
CryptoPunks is not the only popular project that has undergone a full market adjustment. The data from evaluate.market shows that since the record high on February 22, the sales of NBA Top Shot’s multiple price categories NFT have dropped sharply.
Jordan is a semi-anonymous self-proclaimed Top Shot fan. He divides the types of investors in the downtrend into two categories.
“Since February 22, the NFT market has been on a downward trend. There seem to be two types of sellers. One is investors who enter the market early and want to cash out at an exponential profit. The other is at or near the top. Investors who bought at the time, they could not bear the depreciation of their investment day by day.”
Those speculators who wish to buy in January but not in February, welcome everyone back to January.
-☄️☄️☄️☄️( jfreshhh_) April 3, 2021
No matter what the project, it is difficult to watch low prices plummet. According to market tracking website Nonfungible, this decline is affecting the entire market: total sales, total sales value, and number of active wallets within 7 days and 30 days have all declined.
However, Jordan ultimately believes this is a healthy short-term downturn.
“I think this is a healthy, relatively short-term correction. The price increase from January 1 to February 22 is unsustainable. I think the market will continue to fluctuate in the next few months, but I think overall it is very Bullish.”
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.