This week’s whipsaw market movements test NFT traders’ resolve — What’s next?


There is no doubt that there has been an influx of excited investors piled up for Web3 despite the decline in total volume sales in the last 7 days. Since the beginning of May, the total market value of NFTs has risen to more than $ 19.44 billion, with the total volume exceeding $ 1.3 billion in the last 7 days.

NFT market value for 7 days / volume. Source: NFTgo.io

Although the volumes are lower than usual, viewers are quick to wonder whether the projects launched provide practical products given the amount of liquidity flowing into them. Although this is not always the case, NFT investors make their assessments based on roadmaps, announcements and forecasts that the team shares. However, given the speed at which the emerging NFT realm moves, one should expect detours and roadblocks when investing in NFT.

Prominent projects and blue-chip NFT modes like Cool Cats’ Cool Pets, Axie Infinity and even the Bored Ape Yacht Club (BAYC) deviated slightly from their intended plans, slightly curbing the enthusiasm of its users. While this has clearly worked out well for BAYC, it is important for investors to understand that investing capital on the promise of a roadmap can ultimately lead to disappointment.

Lack of prognosis of growing pains

It’s exciting to come across a project that looks like a blue caliber. The project may tick all the boxes and the team has proven that it has previously developed a working product, the art resonates with diverse groups of people. If the community is strong and cohesive around its conviction towards the project and is backed by a desired roadmap, then investors feel convinced they have encountered a winner.

Of course all this is not a guarantee of success.

Take for example Cool Pets, which was launched on January 31st and intends to launch its game to earn (P2E) game, Cooltopia. Several technical failures delayed the launch and resulted in many NFT traders losing faith in the project. In addition, on April 29, Chris Hast, former CEO of Cool Cats NFT, retired and the company is now looking for a replacement.

Often, the biggest deterrent to project success is unforeseen events that can create logistical problems, but it is important to note the difference between “good” and “bad” problems. For example, accelerating growth can create pressure on a project’s ability to expand safely, but often sets a goal.

Axie Infinity, was not immune to a socially engineered hack that resulted in a $ 625 million hack, representing one of the largest crypto currency survivors in history.

As it is, the Ronin Bridge, which transfers funds to the Ethereum network, is closed. That is, the users’ capital is currently locked in the Ronin network until a full audit is completed. This unforeseen event has left investors with their capital locked in and game tokens, in a sharp downward trend. In light of this, community morale has seen some of its toughest days with investors expressing their opinions on how to proceed.

Market cycles can affect morale

Accelerating growth can not only set a goal for the project, but it can also lead to too many chefs in the kitchen experimenting with new ideas. Often, as the project’s user base grows, so does the number of opinions about what is best for the future and sustainability of the community and project. This is where speculation begins to brew and expectations begin to form.

Yuga Labs, The Otherdeed digital NFTs have dropped to their most anticipated nature by 2022 so far, with speculation value Offers over $ 110,880. Most of these values ​​were attributed to rare NFT code scattered randomly on Otherdeed lands.

Because Mint was originally priced on ApeCoin, a secondary marketplace, OpenSea supported APE as a means of payment for future listings. The Otherdeeds sold at an average price of $ 25,629 before the calf but dropped to $ 15,510 after exposure, alongside the APE price drop.

Other than all time average selling price / volume. Source: OpenSea

Although many Web3 investors expected this mint to blow others away, they did not expect the overall crypto and NFT markets to spiral down. In the last seven days, Ethereum has dropped by 15%, and most Ethereum-based NFTs have also taken a hit on their prices. Solana-based NFTs have also been heavily impacted, with SOL down 21% in the last 7 days.

NFT traders also highly expected that mint would boost the NFT market with liquidity. While liquidity has been injected into some collections, the total sales volume for NFTs has dropped by 29% in the last 7 days. These data suggest that the market may enter a period of cooling.

NFT market value per 30 days / volume. Source: NFTgo.io

Because a large portion of the market appears in red, NFT investors find themselves in severe distress. Some investors have expanded leverage far more than they could cover and are forced to sell their assets at a loss to cover margin calls and liquidation. Others rationalize the negative slope for retail investors who panicked because of interest Interest rate hikes in the United States.

WAGMI’s mantra “we are all going to do this” that has become popular among NFT investors is being tested and traders are having to deal with market cycles that are not adorned at an all-time high and monumental volume. On the positive side, builders are often born during these breaks. More experienced investors use expected market views as times to “To pile up and survive“By adding to their portfolios and returning to current highs for all-time highs.