NFT Market Hits Ice Point: Understanding the Reasons Behind and Shifts in Blue-Chip NFT Project Landscape
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NFT Market Hits Ice Point: Understanding the Reasons Behind and Shifts in Blue-Chip NFT Project Landscape
One year after Terra's collapse, the NFT market as a whole has shown a downward trend, with niche NFTs plummeting to near zero.
Navigating Web3 tides with focused insightsAuthors: 0xSevens.lens & Wangzai
Looking back one year after the Terra crash, key NFT market metrics—including overall trading volume, new NFT issuance, and prices of top-tier blue-chip NFT projects—have all shown a downward trend. Niche NFTs at the long tail of the market have even dropped to near-zero valuations.
Analyzing the causes behind this market bottom from surface to depth:
1. Liquidity withdrawal from the NFT market;
2. NFT investors lacking confidence in future prospects, leading to mass liquidation and exit;
3. FUD triggered by whale sell-offs and Blur farmers dumping blue-chip NFTs used as collateral in NFT lending protocols.
From the data, the Terra rekt event was not the lowest point for most NFT prices. The true price bottoms for most NFTs hovered around April 2023, with trading volumes continuing to decline steadily.
Yuga Labs
From the perspective of the sector leader, Yuga Labs launched Dookey Dash, the Bitcoin NFT series TwelveFold, and the second test of Otherdeed, but it has failed to introduce new narratives or gameplay mechanics to attract broader attention and liquidity. The pace of ecosystem expansion far exceeds the actual realization of promised benefits.
In addition, Yuga Labs' ecosystem has further expanded its NFT offerings, yet none have performed well in terms of price. Prior to being separated, Koda traded around 14 ETH, and land parcels were priced at 2 ETH before elemental fragmentation. Now, both series have seen their floor prices halved.
LimitBreak
It’s not just Yuga Labs—LimitBreak faces similar challenges. The diversification of NFT assets within its ecosystem has scattered user attention and liquidity, driving down individual NFT series prices and further eroding HODLing confidence during the bear market.
BAYC
Moreover, following the FTX collapse, major NFT holders such as Franklin sequentially began dumping their Bored Apes and other blue-chip NFTs. This indirectly fueled anxiety and panic among other NFT holders, pushing market sentiment to an all-time low.
Reviewing BAYC's trading volume over the past year, we observed a sharp spike in February (02.24). According to Parsec data, this coincided with a large number of whales exiting their positions.
A potential contributing factor is Blur’s bid mining reward mechanism, which injected significant liquidity into the market while simultaneously accelerating the bursting of the NFT bubble. (Reference link)
The strongest rebounding blue-chips
Among 32 "legacy blue-chip" NFTs, only 13 projects saw price increases, while most suffered declines of 40%–90%. Returns from holding these blue-chip projects have significantly underperformed relative to expected alpha. NFTs that did rally strongly often had derivatives that appreciated substantially as well—for example, Milady and Redacted Remilio Babies, Azuki and BEANZ, Pudgy Penguin and Lil Penguins.
Among the top 15 NFTs by trading volume, only CryptoPunks, Milady Maker, Azuki, and Pudgy Penguins delivered positive returns over the past year. (Note: Azuki experienced a community trust crisis in May last year, amid various scandals and holder-driven sell-offs—the analysis here uses the lowest price during that period.) Truly investment-worthy NFTs are: Milady Maker, Pudgy Penguins, and CryptoPunks.
Among 27 projects launched within the past year, 15 have seen price increases and 12 have declined. Projects with over 10x gains include Opepen Edition, Redacted Remilio Babies, and Nakamigos. Overall, newly launched, high-volume, high-return projects have outperformed older NFT projects, suffering smaller drawdowns.
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