NFT “Black Weekend”: What caused panic selling of multiple blue-chip NFTs?

Author: Teng Yan, Head of NFT Research at Delphi Digital; Translation: Blocking0xxz

Last weekend, we experienced a “black weekend” for NFTs. The floor price of BAYC, MAYC, Azuki, Memeland Captainz and other PFPs fell by 30-60%, and the decline accelerated over the weekend.

What caused all the panic selling? It all started with the casting of Azuki Elementals.

The Azuki community spent $38m to cast this new series. Azuki was already somewhat fragile, with a lot of leverage in the system (at one point there were nearly 700 Blend loans, accounting for 7% of total supply).

The unveiling of Azuki Elementals raised many questions:

Why do they look like OG Azuki? Is this a money grab?

What can you actually get by owning an OG NFT and can it justify its price?

In short, the expectation management was poor. Everyone was expecting something exciting. What we got was chaos.

In one universe, such a sell-off may only occur on Azuki. But NFTs are never isolated. Many Azuki holders also hold other PFP NFTs (and vice versa).

Meanwhile, Memeland Captainz began unveiling their NFTs on Saturday, which at first seemed disappointing.

This triggered a sudden lack of confidence in the NFT community: are NFTs really as worthless/overvalued as they are said to be on CT?

Then panic selling began.

PFP NFTs obviously have the function of classic Van Gogh commodities. An NFT that looks good at 15 ETH doesn’t look as good at 5 ETH!

As prices fall, demand evaporates.

To make matters worse: Despite the fact that a large portion of NFTs are held by community members with diamond hands who have not sold them for months or years…

A large flow supply of NFTs is held by Blur farmers who have been using them in PvP battles to earn Blur points over the past four months. (Thanks to @OGDfarmer for this view) They have no incentive to hold onto their NFTs.

Therefore, once the sell-off starts, they will only add fuel to the fire and exacerbate the sell-off.

Now that the sell-off has stabilized slightly—is this a great buying opportunity or the calm before the next storm?

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