It has been a turbulent few days for the darlings of the NFT world, CryptoPunks. The initial forecast was rosy as the quintessential blue-chip NFTs saw an incredible rise in floor price and market cap. Shortly afterwards however, NFT space was rocked by an unprecedented event: a massive CryptoPunks dump.
On March 21st, over $17 million worth of CryptoPunks were offloaded within a 15-minute timeframe, leading to a staggering 10,000 ETH in trading volume. This unexpected move sent shockwaves through Blur bidding system and caused the floor price to tumble from a peak of 75 ETH down to 65 ETH.
Machi got hit with 77 Punks on that massive dump
unrealized P/L of -1456 Ξ 😳 pic.twitter.com/Kh0gI8QayB
— Bag Holder (@BagHoldingNFTs) March 20, 2023
Despite the significant movement, CryptoPunks has maintained its position above fellow high-flyers, BAYC, in terms of market cap. Mostly due to the algorithmically generated Apes seeing a downturn of their own as the market contracts following the collapse of Silicon Valley Bank.
Caught in the Crossfire
The massive dump was driven in part by the ongoing Blur farming frenzy, as collectors clamor to benefit from its ‘loyalty’ program. The mechanics of Blur farming involve a collection’s 24-hour daily volume correlating to the number of points it will yield. Consequently, farmers aim to bid on top collections with the lowest possible royalties to minimize losses.
CryptoPunks were recently added to Blur with 0% royalties instead of the typical 0.5%, making them the most attractive collection for farming bid points. The lack of royalties encouraged intense competition among farmers, driving the floor price of CryptoPunks up to the heady heights of 75 ETH. However, the rapid growth could not be sustained, as the 75 ETH wall proved a formidable barrier.
This incredible series of events saw NFT whale, Machi Big Brother caught in the crossfire, with reports indicating he picked up as many as 77 Punks through Blur’s automated trading feature. Before the dump, Machi had successfully bid thousands of ETH across top collections, earning approximately 4% of total bid points. However, the smooth sailing abruptly stopped when the market began to turn sour.
As the NFT market continues to evolve, the implications of the massive CryptoPunks dump on the broader market remains uncertain. This event is a cautionary tale for investors and enthusiasts, highlighting the inherent risks and volatility in the rapidly evolving NFT space. It remains to be seen how the Market will react to this unprecedented event and whether it will lead to further sell-offs or trigger a price rebound.
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NFT and Web3 Ambassador. Bullish on all things Blockchain.