Non-fungible tokens (NFTs) are on the rise, and for those keeping an eye on rising prices, the market appears to be booming. The overall event, however, told a different story.
The leading rallies are Bored Ape Yacht Club and Pudgy Penguins. Their floor price (lowest possible acquisition cost) has increased by double digits in recent weeks, and their token has also seen double-digit gains. Still, this recovery is unfolding, but with far fewer buyers.
The floor price of Pudgy Penguins has climbed above 5 ETH, up more than 20% this week, with 201 sales and nearly 1,000 ETH in volume over the past seven days supporting the move. BAYC’s bottom line is up 81% over the past 30 days, rebounding sharply from depressed levels.
The floor price is an important indicator to follow. In the NFT series, the reserve price is the lowest-priced item currently on sale. If the lowest-priced Chunky Penguin on the market is listed at 5.38 Ethereum (ETH), that price will become the floor price of the series. A rising floor usually means buyers are willing to pay a premium to enter. A falling floor usually means holders are eager to exit.
But behind the overall price rise, market structure tells a different story, as broad participation is shrinking.
According to data from CryptoSlam, global NFT sales dropped to approximately US$175 million in April from US$304 million in February, with both total transaction volume and the number of active users falling by nearly half.
Meanwhile, the average sales price more than doubled month-on-month, climbing from $30.60 in March to $67.38 in April. These two data points describe the same phenomenon from opposite perspectives. Smaller funding pools are focused on high-value transactions in blue-chip collectibles rather than widespread demand returning to the market.
Even within blue-chip stocks, the quality of demand varies. Pudgy Penguins is seeing relatively high trading volumes and rising prices, a sign of continued activity. In comparison, collectibles like CryptoPunks have similar but much smaller weekly trading volumes, meaning a small number of large transactions have a huge impact on the price.
Broader market signals remain mixed. According to data from CryptoSlam, wash trading still accounts for approximately 50% of total trading volume, and total trading profits remain negative, indicating that despite the recent rebound, many players are still underwater.
Taken together, these data suggest that the market is stabilizing but not yet expanding. Prices are rising, but participation is declining, with activity concentrated on a few series.
Meanwhile, ETH is up about 18% over the past month, and BTC is up almost 18% as well. Parts of what appears to be an NFT-specific rally are simply a beta test of the overall cryptocurrency risk appetite movement, with ETH-denominated blue chips following the uptrend along with every other asset.