The Ethereum floor price of the Bored Ape Yacht Club (BAYC) NFT collection has fallen to its lowest level since the beginning of the year. This is because the NFT market is still falling, and the crypto market as a whole is also falling.
The floor price of Bored Ape Yacht Club NFTs dropped to 65.68 ETH, which is the lowest level since January 2, 2022. Recent data shows that it has been going down since May 1, when it hit an all-time high of 153.7 ETH.
With a market capitalization of 656,800 ETH, BAYC is still the largest NFT collection. Its closest competitor, CryptoPunks, has a market capitalization of 655,000 ETH and a floor price of 65.5 ETH.
But it’s not all bad news for those with Bored Ape. Due to the fluctuating price of Ethereum, the BAYC floor price is around $107,000 today. This is a lot less than it was at the beginning of the year when it was just under $256,000, but more than it was in June when it was just under $87,000.
BAYC faces liquidations on BenDAO
To add fuel to fire, they will likely sell off Bored Apes bought with loans from peer-to-peer lending service BenDAO because the floor price of the collection is going down.
Customers can borrow ETH from BenDAO in exchange for NFTs. Users can borrow up to 40% of the floor price of an NFT. If the NFT’s floor price drops to a point where the “health factor” of an NFT-backed loan is less than 1, the NFT is put up for auction for 48 hours and sold to the highest bidder if the loan isn’t paid back.
72 Bored Ape Yacht Club (BAYC) NFTs on the platform are in the “danger zone.” NFT trader Cirrus, who broke the news about the possible liquidations, defined the “danger zone” as having a health factor of less than 1.2. This means that if the price floor drops, a liquidation could happen.
In its Frequently Asked Questions, BenDAO says that “short-term changes in the NFT floor price are normal” and that “consensus on bluechip NFTs wasn’t built in a day, and it won’t be destroyed in a short amount of time.”
Its documentation also says that “the platform only has a temporary floating loss and no actual losses.” However, it doesn’t say what happens if no buyer comes along and the value of the NFT falls below the value of the interest-bearing debt.
With the BAYC floor price down 57% from its all-time high in May and 2.57% of the BAYC collection linked to BendDAO, this could become an important question.
NFTs like BAYC that run on the Ethereum network and sold for Ether (ETH) follow the price of Ethereum.
The Bear Market Trend So Far
In May, Terra’s algorithmic stablecoin UST failed, and in June, hedge fund Three Arrows Capital and crypto-lender Celsius Network both filed for bankruptcy. As a result, Ethereum lost 43% of its value.
In the same time frame, from May to June, the floor price of BAYC fell by 36%, from 116 ETH to 65.5 ETH.
But as investors prepare to profit from Ethereum’s upcoming Merge, NFTs have fallen behind the second-largest cryptocurrency by market cap.
Between June 19 and August 20, Ethereum went from a low of $995 to a high of $1,634. At the same time, BAYC’s floor price kept going down.