- The latest drop in NFT could be attributed to the Azuki Elementals fiasco, which triggered a sharp drop in price floors.
- The contagion has also engulfed other top-notch NFT collections.
With the bear market negativities 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 exploits of 2021. Unfortunately, that has not been the case!
After hitting yearly highs in February, weekly sales volume has steadily declined. The fall intensified throughout the second quarter, and July saw the lowest weekly sales figures since May 2021, according to CryptoSlam.
The latest slump could be attributed to the Azuki Elementals fiasco which triggered a sharp drop in floor prices across the spectrum. Azuki has been in the eye of the storm since the release of her collection Elementary.
The launch was met with a fierce reaction from members of the Azuki community, with many to accuse the collection to be almost identical to the original collection released last year
With even experienced investors dropping their collections, we thought it would be prudent to hear what the experts thought of the ongoing downturn. And who better than our AI expert ChatGPT to start the procedure!
“The Azuki fiasco a lesson for the market”
I gave a brief overview of the Azuki issue and asked the OpenAI bot to comment on the damage these developments are causing to general market sentiment.
Currently, ChatGPT’s ability to express itself is hampered due to restrictions imposed by the creators. To make him talk, I used the “jailbreak” hack.
Source: ChatGPT
At its eloquent best, the AI tool acknowledged that the debacle may well have shaken enthusiasts’ faith in the concept of NFTs. He pointed out that such incidents will serve as a lesson to the market to promote authenticity in NFT projects and lead to further scrutiny in the future.
As is his habit of ending things on a high note, ChatGPT reiterated that NFTs are a “realm of boundless creativity” and will continue to find relevance among avid creators and collectors.
No end in sight to Azuki’s woes
Based on data shared by on-chain analytics firm Nansen in a July 27 post, almost all of Azuki’s collections saw a significant drop after Elementals.
Azuki has seen a 63% drop in the floor price over the past 30 days. BEANZ Official, another popular collection in the ecosystem, saw a 68% decline over the same period.
Source: Nansen
Azuki was ranked sixth in NFT collections that lost the most value over the past 30 days with a volume of at least 100 ETH, Nansen said. BEANZ was ranked third in the list.
With price floors dropping, long-term investors began to dump these once-coveted collections on the fly. Azuki was also the second most traded NFT in the past 30 days.
Checking the status of top-notch collections
Azuki’s contagion has also engulfed other top notch NFT collections. According to NFT floor price data, the Bored Ape Yacht Club (BAYC) floor price has fallen by more than 16% in the last 30 days. The value of BAYC fell to a two-year low of 27 ETH during the first week of July.
The Yuga-owned entity has since recovered, rising to 30 ETH at press time.
In the case of CryptoPunks, the turnaround was faster. Since dropping to a multi-year low of 41 ETH in early July, the NFT profile picture has recovered almost all of its losses. At press time, the floor price was 47.69 ETH.
I took the opportunity again to bring in our AI expert. I asked him about the potential impact of the Azuki fiasco on NFT’s flagship collections. And again, he avoided any eyebrow-raising response.
Source: ChatGPT
The bot said that despite short-term fluctuations, BAYC and CryptoPunks had to navigate murky waters given their scale and the support of dedicated communities. He took a step forward and called these collections “precious gems of the NFT landscape”.
“The market needs new stories”
Needless to say, relying solely on what an AI tool says when it comes to understanding the nuances of a niche market is impractical. There’s nothing like getting insights from real-world experts.
Gracy Chen, CEO of crypto exchange Bitget, highlighted relevant issues with the current state of the NFT landscape.
She pointed to the lack of new narratives within the ecosystem as one of the major factors inhibiting overall growth. The done-to-kill PFP (profile picture) model faltered as users waited for new 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 have a negative impact on the prices of first generation NFTs.