NFT Sales Drop as the Market Shows Weakness

GB Market Commentary 13/09/2021

by Freddie Evans

After a ropey last seven days for crypto since the rapid drop in price seen across most coins last Tuesday, bitcoin now sits at $44,832 at the time of writing. This is a 0.68% fall in price in the previous 24 hours and a 17.75% decrease in price since the peak of $52,790 seen on the morning of last Tuesday (data taken from CoinMarketCap). Bitcoin is now consolidating at the current price and could face another major decline if it breaks the $44,200 support zone. If Bitcoin fails to break through the $46,000 resistance zone, it could resume its decline. While Bitcoin is sitting in a recent low, the crypto community remains confident of its long-run upward trajectory as the Chief Investment Officer of the world's largest asset manager, Blackrock, said that he could see Bitcoin going up significantly. However, he continued to emphasise the volatility of Bitcoin, which is the reason why Blackrock has a "very moderate" amount of cryptocurrency in its portfolio.

Ethereum has had a similar last week to bitcoin and has seen a 3% fall in price in the previous 24hours to a current price of $3,210 at the time of writing. Since Ethereums rapid fall last Tuesday, the price is now 23% lower than its seven-day peak of $3,963 last Monday. Ethereum is struggling to climb back to $3,500, and it could decline further below the $3,200 support zone. On the positive side, Ethereum is getting less expensive to use, with the average transaction cost currently at $12.2, according to Etherscan. This is a dramatic decline from the average of $59on September 11 and comes as the NFT boom takes a breather, with the seven day average forNFT sales declining from august 29, from just over $1 billion to $217 million yesterday.

Keeping with NFTs, the Solana blockchain this weekend has seen its first million-dollar NFTsale. Moonrock capital, a Blockchain advisory firm, purchased one of the Degenerate ApeAcademy NFTs for 5,980 Sol, worth $1.1 million. The ape is only the 13th rarest in the collection, while the firm also purchased the 18th most rare. The recent purchase shows the continuing shift in the NFT markets from the Ethereum blockchain to others, such as the Solana network. The high gas fees in Ethereum are the route cause of this shift, so it will be interesting to see whether it shifts back once Ethereum upgrades its system.

Cardano has successfully implemented its much anticipated Alonzo hard fork this morning. It ushers in smart contracts laying the groundwork for decentralised applications such as decentralised exchanges and non-custodial lending apps. There have been problems with its design, meaning that they cannot launch with a larger range of smart contracts, but as the team has stated, it is still "early days for the project", and now is when "the mission truly begins."

This morning, the Financial Times reported that the new market rules being implemented in South Korea are likely to cause $2.6 billion in losses. The Financial Services Commission, the South Koreas financial watchdog, has set a September 24 deadline when a range of tight regulations come into force in its efforts to tighten oversight of the country's expanding crypto sector. These new rules increase transparency within the exchanges to expose money laundering and other financial crimes. Most local exchanges are battling to meet the conditions, with almost40 of South Koreas 60 crypto operators expected to be shut down when the new regulations come into force. It is likely that there is a mass run from smaller exchanges as we get closer to regulation changes due to fears of closure with customer protection being sidelined.