The recent decline of Azuki, a major NFT project, has raised concerns about the possibility of an NFT bear market.
The decline of Azuki’s floor price from its peak of 16.5 ETH to 5.5 ETH, representing a significant drop of 67%, was triggered by a FUD (Fear, Uncertainty, and Doubt) event surrounding the project.
The community accused Azuki’s new series, NFT Elementals, of team mismanagement and holding 20,000 ETH with no progress in the past year.
This led to the filing of a lawsuit by Azukidao, composed of whales and community members, against Zagabond, the founder of Azuki, and a proposal to refund the 20,000 ETH.
Summary
Azuki is not the only case; the NFT sector is on edge
Azuki‘s decline was not an isolated case. Other leading NFT projects, such as Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC), have also suffered significant declines in their base prices.
BAYC’s base price fell below 30 ETH with a 23% drop in the last 7 days, while MAYC experienced a 30 % drop in the same period.
This downward trend has also affected NFT lending platforms, with significant decreases in Total Locked Value (TVL) in one day. Paraspace’s TVL fell 11% in the last 24 hours, BendDAO’s by 53%, and Blur lending’s by 26.7%.
Despite the drop in floor prices, trading volume on NFT platforms has increased in recent days.
This indicates that there is intense market activity and significant turnover on the fund. The market is going through a period of adjustment, and panic selling can lead to short-term price declines.
However, it is essential to recognize that a decline in the NFT market does not necessarily indicate the decline of the entire industry.
As explained by Gracy Chen, managing director at Bitget:
“The NFT market is at a crossroads, where price fluctuations become more pronounced in the short term due to the emergence of NFT derivatives. These derivatives include lending platforms, indexes, perpetual contracts, and other innovative products that have gained ground. While the current market settling may bring challenges, it also presents opportunities.”
The importance of approaching these situations with a balanced perspective should be emphasized
Once the FUD surrounding Azuki and other projects subsides, there will often be room for recovery and growth.
Projects such as Blur, which demonstrate technological innovation and overall growth in product data, may experience a brief rebound after the sharp decline in the NFT market.
This presents an opportunity for users interested in short-term trading to pay attention and potentially capitalize on this market fluctuation.
It is critical to approach the situation with a balanced perspective. While the decline of Azuki and other blue-chip NFT projects causes concern, it is important to consider the broader NFT ecosystem and the potential for recovery and new opportunities.
The NFT market has proven resilient in the face of past challenges and is likely to adapt and evolve in response to the current situation.
FUD events, such as the one involving Azuki, can have a significant impact on investor confidence and lead to only temporary bearish sentiment.
The recent decline should be seen as a correction rather than a complete collapse of the NFT ecosystem.
Projects that can weather the storm, address the concerns raised by the community, and demonstrate their long-term viability have the potential to recover and thrive.
In addition, the current drop in ground prices presents an opportunity for collectors and investors who have been sitting on the sidelines due to high entry costs.
Lower prices may entice new participants to enter the market and diversify their NFT portfolios. Increased trading activity during market downturns often provides opportunities for value investments and strategic acquisitions.
The NFT market does not depend solely on the price performance of major projects such as Azuki
It is worth mentioning that the NFT market does not depend solely on the price performance of individual projects.
The growth of NFT derivatives, such as lending platforms, indexes, and perpetual contracts, indicates the expansion of the NFT ecosystem beyond just collectibles.
These derivative products offer investors additional opportunities to participate in the market and hedge against price volatility.
As the market matures, these innovative financial instruments are likely to play a more significant role in stabilizing the overall NFT market.
In addition, regulatory developments and industry standards may also play a crucial role in shaping the future of NFTs.
As the industry gains mainstream attention and adoption, regulatory frameworks may be established to protect investors and ensure transparency.
Greater regulatory clarity can bring stability and confidence to the market, attracting institutional investors and fostering further growth.
In conclusion, although the recent decline of Azuki and other first-rate NFT projects has created a sense of uncertainty, it is essential to view this phenomenon as part of the natural evolution of the market.
The NFT ecosystem is still in its early stages and fluctuations are predictable. However, as the industry continues to mature, opportunities for growth and innovation remain abundant.
Investors and collectors who conduct thorough research, evaluate project fundamentals, and stay informed about market developments can weather the current downturn and position themselves for long-term success.
Ultimately, the future of the NFT market will depend on the resilience of projects, the introduction of innovative financial products, regulatory developments, and the continued interest and support of participants in the ecosystem.
