About: Investoom Weekly is the newsletter by the market intelligence company Investoom that provides AI-powered investment insights through social sentiment data, onchain data and financial data. Investoom democratizes the access to hedge fund insights.

Overview of the topics

• NFTs Highlight: From its latest peak the floor price of the most famous NFT collection, Bored Ape Yacht Club, has fallen more than 50%.
• Social Data: In the past months the number of tweets published on the crash of the NFT market on Twitter has been highly volatile.
• Onchain Data: Worldwide retail investors, which spend less than $100.000 in NFTs, represent 80% of digital tokens transactions.
• Financial Data: The strong crossover existing between cryptos and NFTs market participants could be only due to NFTs payment options.
• Deep Dive: Researchers have identified three different scenarios that could shape the future trends of the NFTs market.

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NFTs Highlight

BAYC are down 52% in price

The floor price of the most famous NFT collection, Bored Ape Yacht Club, has just fallen 52% to 74 Ether, from a high of 153.7 on May 1. It means that over the past 6 months, the floor price of the the NFTs included in the collection plummeted.

What are we talking about? Bored Ape Catch Club is a collection of 10,000 NFTs based on Ethereum, which was launched in 2021 by the startup Yuga Labs. The tokens included in the BAYC are known as “Bored Apes”, works of digital art depicting apes in various expressions or clothes. Throughout the past year their price exponentially increased; while during the launch each ape was purchased for 0.08 ETH, the most expensive one was acquired for 740 ETH, equal to $2.91 million at that time.

The exclusive perks gained through an NFT of the collection and the hype caused by Justin Bieber and Snoop Dogg led the NFT market in a booming phase. Therefore, the fall in their floor prices could suggest that the whole market has collapsed.

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Social Data

The NFT market has collapsed

In just 4 months, the largest NFT marketplace, OpenSea, went down 99%. How much it has lost? On May 1, OpenSea processed $405.75 million NFT transactions, versus the $5 million it had on August 28. The company recorded also 24,020 daily users, a third fewer from its latest peak.

NFT prices are expressed in the currency of the blockchain on which they were created. Therefore, a token launched on Ethereum must be acquired through Ether and will strongly depend on its market valuation. A bearish crypto market is the reason why NFTs show poor statistics. From January, Bitcoin, the most popular cryptocurrency, went down 59% to $18,950. In the same period, the second largest cryptocurrency by market cap, Ethereum, fell 65% to $1,277.

The spokesman of OpenSea announced that they are not concerned about short-term volatility. Is it the same for retail investors? Even if from January the number of tweets published on the crash of the NFT market on Twitter is deeply volatile, it has begun to be slightly downtrend.

According to the company, the hype could have diminished because the community and use cases have evolved, becoming more sophisticated. Indeed, observing the NFTs sentiment, we can notice that not all tokens have showed up a reduction in their floor price; during the week of the 17th October, the most trending ones, at least according to Twitter investors, were Exosama, Critters Cult and PlayDapp & Mikey.

Launched this month, Exosama - Expect Chaos (EXO) is a sci-fi collection based on the Polkadot network, a shared protocol that enables blockchain networks to operate together. These NFTs gained fast a certain popularity among investors, which permitted to the collection to increase its sales volume of +100% during the last week of September. Today, the floor price of EXO is 2,4 Ether, which corresponds to $3.078, with a market cap of 24,000 ETH, which means $30 million.

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Onchain Data

Retail investors are reeling

Because of the market downturn, which caused a drop in NFTs floor prices, many retail investors are reeling. A study from Pew Research Center published in September found that nearly the half of Americans that invested in cryptos and NFTs declared that their investments were not at the height of their expectations.

However, retail investors represent 80% of digital tokens transactions. In fact, the large majority of NFTs transfers last year were made by investors that spent less than $100.000.

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Financial Data

NFTs will decouple from cryptos

Since the meltdown of the crypto market brought down the expectations of NFTs investors, we should ask ourselves : do NFTs prices really depend on cryptos? Michael Dowling, a professor of the Dublin City University, tried to provide an answer. The strong crossover existing between cryptos and NFTs market participants could be due to NFTs payment options. Since they can be acquired only through cryptos, they exclude from the market investors that aren’t familiar with digital currencies.

However, crypto exchanges are willing to increase the participation in the NFT market. Indeed, Coinbase has announced that users will be allowed to buy tokens with their credit cards. It is not the only one: eBay, Reddit and -even Instagram will enlarge the market by integrating NFTs with cash. Therefore, even if the oscillations of Ether is guiding NFTs floor prices, in the next years NFTs could decouple from cryptos.

“Immediately apparent from the results is that, compared to crypto, there is much lower spillover from and to NFT markets”, has stated Michael Dowling. What does it mean? Simply that a drop in crypto value carries with it a lower purchasing power and depresses the NFT market, but in the future the effect could be reduced. In fact, when cryptos appreciate, investors tend to search for alternative investment opportunities to NFTs.

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Community

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News of the week

• Bitcoin: Bitcoin fails to rally with stocks as $940 million of the crypto is pulled from exchange favored by institutions. [Read more]
• Ethereum: Will ETH price crash to $750? Ethereum daily active addresses plunge to 4-month lows. [Read more]
• Twitter: Elon Musk plans to cut 75% of Twitter staff if he takes over company. [Read more]
• Celsius: Warner Bros. teams up with web3 startup Eluvio to launch ‘Lord of the Rings’ NFTs. [Read more]

Read the full version here.

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About

Investoom is a Munich-based Fintech Startup democratizing the access to quantitative investment insights that are used by big hedge funds, but are inaccessible to retail investors. We are a market intelligence company that provides AI-powered investment insights through social sentiment data, onchain data and financial data.

Disclaimer: The Investoom newsletter is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions. [Read more].‍