The recent plunge in the Non-Fungible Token (NFT) market has resulted in the largest liquidation event in the sector’s history, according to a report by SnowGenesis. More than 1,200 NFTs were liquidated over the past three days, including over 630 Beanz, a derivative companion project of Azuki. The recent turbulence signifies that nearly 3% of total Beanz NFTs have been liquidated.
Cascade of liquidations
According to data from SnowGenesis, the once-buzzing NFT sector has taken a hit, causing deep dejection among collectors. Whether we will see the highs of 2021 is worrying both traders and enthusiasts.
Arcade protocol advisor ‘Cirrus’ disclosed on Twitter that the NFT market has undergone “the worst liquidation cascade” ever recorded. Over the last 96 hours, approximately 1,244 liquidations occurred, excluding “forced sellers”. By contrast, only around 10-15 NFT loans were liquidated per day over the past year on average.
The culprit? Azuki Elementals
Beanz NFTs were the most affected, with more than half the total liquidations, according to ‘Cirrus’. Yet, there is a silver lining as underwater loans are decreasing according to Cirrus:
“Good news is that the rate of liquidations has slowed drastically over the last few hours. Think we’re done with those sharp one-day moves down that we’ve seen over the last few days,”
The recent instability in the NFT market was largely influenced by the controversial launch of Azuki Elementals, a new NFT project by Azuki. The project sold out in minutes, generating $38 million for Azuki creator Chiru Labs. However, collectors criticized the new collection, claiming its NFTs were nearly identical to the original Azuki collection.
The impact on blue-chip collections
The crisis has also affected blue-chip collections such as the Bored Ape Yacht Club (BAYC), with daily transactions dropping significantly. At the time of writing, one NFT from BAYC is trading at a multi-month low of 27.9 ETH. The last time BAYC’s floor price dropped below 30 ETH was in late 2021.
Other notable collections, such as CryptoPunks and Mutant Ape Yacht Club (MAYC) have also seen slight declines in their base prices. The state of the NFT market remains delicate, but there’s a glimmer of hope as blue-chip NFTs appear to be bottoming out, marking the potential start of a recovery phase.
Conclusion
The recent liquidation event in the NFT market is a sign of the current volatility in the sector. However, there are signs that the market may be bottoming out, and a recovery could be on the horizon. Only time will tell how the NFT market will fare in the long term, but the recent events have certainly shaken things up.
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