Mass Extinction

Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.

GM everyone. I hope you all have been enjoying the month of July. It’s been an interesting few weeks for lack of a better term and transparently it doesn’t seem like there’s much positivity on the horizon in NFT land. I haven’t been paying as much attention to the jpeg market over the last 2 weeks because it’s simply -EV. With how easy it is to make ETH these days gambling on-chain with shitcoins, it makes sense that many have strayed away from the pictures-on-the-blockchain casino to the animal racing, bot, meme, whatever meta of the day coin you chase, casino. Nonetheless, it’s time for me to come back here and share some thoughts on everything.

2 weeks ago I made a blog post called “Dead cat bounce”. I don’t want to pat myself on the back too hard but let’s check out how we’re doing. It seems like months ago Apes were at 35 ETH and Azukis were above 7 ETH, but that’s where we were. Now with the monkeys looking to take out 30 ETH and Azuki’s significantly below 5 ETH (for the first time EVER!!!!) I have some solace. It’s not fun to watch the prices of things go down, especially when your friends own a lot of those things going down. However, watching your thesis directly play out as you envisioned it, is also quite nice. We did in fact have a dead cat bounce.

Outside of Penguins and DeGods (removing my bias here) everything is looking straight up VERY bad. Maybe this is the actual bottom, I don’t think so. MAYC and Captainz are hovering around 5.5, Moonbirds/Doodles/Clones are not even worth talking about anymore, and even Miladys is significantly below 3 ETH right now. Looks like things aren’t as great in ordinals land either.

There’s many issues with NFTs right now. I think there are two issues that I focus on which are related to the devastating price action:

• It’s just not the meta right now. There are literally 100+ easier ways to make money than in illiquid jpegs at the moment combined with very little catalysts on the horizon.

• The other is that after 2+ years, most projects have nothing to show for it. Outside of airdrops of other NFTs and “muuuuh community” do these projects have actual products? For the most part, it seems like the community is the primary buyer for any sort of value extraction.

Looking at Nansen, this is the lowest volume traded for NFTs we’ve seen all year. Even worse, if you bring the chart out, we’re trading less ETH than November 2021, which was the volume bottom for NFTs before kicking off the mania. Wild when you think about it and we’re practically trading at levels not seen since July 2021. Gross!

So that begs the question, how much worse can it really get? Let’s remember that Blur farmers are BTFO, NFT sentiment gets worse week-over-week, there’s no airdrop or catalyst on the horizon, and on-chain is 10x superior to trading jpegs at the moment.

We can think about this in a few ways. Accumulate “long-term” holds although after seeing the beloved “blue chips” of 2022 suffer a quick death out of nowhere this doesn’t seem viable outside of like 3-4 projects in my opinion. One thing I’ve been thinking about is “ponzi” type NFTs or NFTs related to shitcoins. We saw Sprotos go from 0 to .6 quickly on the HPOS pump. There’s a few more collections I’m looking at but Market Cap and liquidity are a bit too low to share. Also coin related, many of you are aware that Creepz has been a stablecoin at 1 ETH for over a year now which is quite impressive. Supposedly $Portal coming to them by EOY.

A lot of my sentiment is what you would see around a bottom. Maybe it is. But considering my dead cat bounce post from 2 weeks is now coming to fruition, I am sorry to say that I believe a lot more pain is coming (not too bad for $MYBAGS though).

Anyways, that’s really all that’s on my mind at the moment. The NFT market sucks right now and that’s as blunt as I can get. Of course, slowly building a position in something you believe in (Penguins for me) has a decent chance of working out, but there are way more +EV places to focus your attention at the moment. Best of luck out there.

Cheers,
W