Last week, the floor price of popular non-fungible token (NFT) collection Bored Ape Yacht Club fell below 30 ETH, sinking to a 20-month low. It’s hard to pinpoint exactly why the collection’s floor price has dropped so dramatically, though it’s likely due to a combination of factors – there’s been a broader cooldown in the NFT market that has impacted many of the top NFT collections and an extended crypto winter has affected the price of Ethereum, which powers most NFT collections.
The fact that BAYC – long ranked as one of the top collections across NFT marketplaces – has experienced such a steep decline in floor price has some critics knocking it as a fall from grace.
One popular tweet circulating on Twitter singled out a Bored Ape NFT acquired by Justin Beiber in January 2022 for $1.3 million. According to the tweet, the Ape is now only worth about $59,000. Media quickly picked it up and labeled it a loss for Bieber, who has not yet sold the NFT.
Justin Bieber purchased this Bored Ape NFT in January 2022 for $1.31 million.
Today, it’s worth $59,090. pic.twitter.com/nKKDzH3UvP
— Watcher.Guru (@WatcherGuru) July 3, 2023
As it turns out, determining the value of an NFT is slightly more nuanced than that. While floor price is a helpful metric that indicates the lowest price a seller wants for an NFT in a given collection, it often does not reflect every NFT in a 10,000-edition collection.
There are many factors that go into determining how valuable an NFT is, according to industry experts. There’s the floor price, which best reflects the perceived value of the most basic NFTs in a collection. And then there’s the price of Ethereum, which can fluctuate greatly on a given day. But there are also individual factors that make one NFT more valuable than its neighbor, including its cultural significance, its rarity ranking and a collector’s personal affiliation to the asset.
Many generative art NFT collections have embedded rarity traits. This is why collections like Bored Ape Yacht Club or CryptoPunks have become so popular as profile pictures (PFPs) on social networks like Twitter – showing off a rare PFP carries the same social significance as owning an expensive handbag.
“Rarity traits refer to unique characteristics of an NFT, such as limited edition releases,…
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