Bored Ape Yacht Club Loan Deathspiral Could Nuke Entire NFT Market, Warns Crypto Analyst

Zinger Key Points
  • 30,300 ETH or $55 million worth of NFTs are on the line, warned a crypto analyst on Twitter.
  • Users who loaned Bored Apes on BendDAO are likely to be liquidated, further tanking the collection's price floor.
Bored Ape Yacht Club Loan Deathspiral Could Nuke Entire NFT Market, Warns Crypto Analyst

A series of Bored Ape Yacht Club (BAYC) loan liquidations on NFT liquidity pool BendDAO could wipe out the entire NFT market, warned pseudonymous crypto analyst “doubleQ."

What Happened: BAYC holders that deposited their NFTs on BendDAO in exchange for short term Ethereum ETH/USD are at risk of being liquidated and losing their assets, as per data from BendDAO.

See Also: WHAT IS BORED APE YACHT CLUB?

BendDAO is a peer-to-peer decentralized lending platform for NFTs. Users could deposit their Bored Ape NFTs on the platform as collateral and get a loan worth up to 40% of the NFT’s value.

As the price floor for the BAYC collection has dropped to 72 ETH, as per data from CryptoSlam, the health factor of those who deposited their Bored Apes have fallen to health levels under 1.2, suggesting a mass liquidation event is likely to unfold.

“Opensea volume is at the lowest point ever in the last 12 months. There's simply not enough volume to save these liquidations,” doubleQ said on Twitter. “It's inevitable.”

Although BendDAO accounts for just two to three percent of BAYC supply, the implications of the liquidations could still add a significant amount of pressure to the underlying collection’s floor price.

See Also: Ethereum Co-Founder Vitalik Buterin: Millions Of People Have Crypto Wallets To Trade Monkey Pictures

Price Action: At press time, ApeCoin APE/USD, the native token of the BAYC ecosystem, was trading at $5.61, down 8.6% over 24 hours.        

Bitcoin BTC/USD, Ethereum ETH/USD and Dogecoin DOGE/USD were trading at $23,100, $1,184 and $0.075, respectively.

Posted In: BAYCBored Ape Yacht ClubNFTNon fungible tokenCryptocurrencyNewsMarkets

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