ApeCoin: Falling NFT Prices Means a Further Stampede Out of APE-USD

Apecoin - Falling NFT Prices Means a Further Stampede Out of ApeCoin

Source: mundissima / Shutterstock.com

Admittedly, my take on ApeCoin (APE-USD) was proven wrong. Back in April, I argued that after its post-debut surge, this token, an offshoot of the famed Bored Yacht Club (BAYC) non-fungible token (NFT) collection, would not see another “to the moon” move. As you may know, late last month, APE-USD experienced another short-lived spike in price.

This was due to the mad dash to accumulate the token, in order to participate in a planned Dutch-style auction of virtual plots in Otherside, a metaverse created by BAYC developer Yuga Labs.

However, Yuga then decided to offer plots at a fixed price, instead of auctioning them off. This resulted in token prices quickly reversing course. Within a few days, ApeCoin fell from the high- $ 20s to the high-teens per token.

It received another boost, as a Tweet from Elon Musk sparked some short-lived excitement. In short, for about a month, ignoring my advice was profitable.

But unless you sold in early May, holding on since April has resulted in losses. At the start of this month, the latest crypto sell-off, driven by the Federal Reserve and its efforts to bring down inflation through fiscal tightening, kicked off.

Established coins, “altcoins,” and the memecoins have all experienced double-digit losses. ApeCoin’s drop, however, has been more dramatic. While Bitcoin (BTC-USD) and Ethereum (ETH-USD), and even Shiba Inu (SHIB-USD) are down between 15% and 17.5% over the past week, APE-USD is down around 38%, and has fallen back to single-digit prices. What’s driving this?

Perhaps it’s the fact the NFT market is facing heavy downward pressure as well. The crypto crash has extended over to NFTs, with even the price of “high-quality” Bored Ape Yacht Club NFTs experiencing a sharp drop in price.

On April 29, the floor price of a BAYC NFT was $ 429,000. Check out major NFT marketplaces like Opensea.io today, and you can find auctions for ones going well under half of that ($ 180,000).

With this steep drop in price, due to traders cashing out of crypto and NFTs in a panic that the “party over,” you may think it’s prime time to go contrarian. My take? Think again. This exodus is not an irrational move. Just like I said when talking about Shiba Inu, a more serious Fed is bad news for “sillier” digital assets.

As monetary policy returns to normal, more speculative asset classes (richly-priced tech stocks, crypto, NFTs) will likely continue to fall in price. In the case of something like BAYC NFTs, their lower liquidity could mean further outsized drops in price. This in turn is bad news for its native token.

As my InvestorPlace colleague Mark Hake recently argued, it has no real-life use case. Its performance hinges entirely on the popularity of BAYC NFTs. As said NFTs continue to fall in value, you can expect the same to happen with ApeCoin.

On the date of publication, Thomas Niel held long positions in BTC-USD and ETH-USD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.

Source

Stay in the Loop

Get the daily email from CryptoNews that makes reading the news actually enjoyable. Join our mailing list to stay in the loop to stay informed, for free.

Latest stories

- Advertisement - spot_img

You might also like...