ApeCoin, an Ethereum-based token linked to Yuga Labs’ popular Bored Ape NFT collection, has experienced a significant decline of 15 percent in the past two weeks amid increasing pressures in the market.
The token hit an all-time low of $1.85 on Friday, according to CoinGecko. While Bored Ape NFTs have seen a recovery of $10,000 from recent lows, ApeCoin came close to hitting a new bottom on Monday following the fresh low on Friday.
ApeCoin gained momentum when it was introduced in March 2022. Shortly after its launch, the ape-themed token reached an all-time high of $26.70 in April, boasting a market capitalization of nearly $7.6 billion.
In the same month, Bored Ape NFTs reached the highest floor price of 152 ETH or approximately $429,000. The surge was fueled by celebrity owners and the enticement of Yuga Labs’ Otherside metaverse game.
Since then, Bored Ape prices have dropped as low as approximately $52,000 worth of ETH as of July 2. ApeCoin has plummeted by approximately 93 percent from its peak as of the time of writing.
ApeCoin plays a crucial role in Yuga Labs’ Otherside. It serves as the standard currency within its virtual world. In late March, Otherside conducted its second playtest, involving 7,200 Voyagers who got a brief preview of the upcoming game.
Yuga Labs adopted the token after its launch by ApeCoin DAO, a decentralized autonomous organization that allows community members, including Bored Ape holders, to influence project decisions and rules.
The APE Foundation serves as the DAO’s day-to-day administrator, acting as the token’s “steward.” Last week, the DAO elected new members to the foundation’s special counsel, filling seats vacated by Animoca Brands chairman Yat Siu and Reddit co-founder Alexis Ohanian.
Upon ApeCoin’s launch, Bored Ape holders and Mutant Ape Yacht Club NFT holders could claim a predetermined allocation of tokens.
Despite ApeCoin’s current near-all-time low price, its market capitalization of approximately $700 million is comparable to the total value of tokens used in other metaverse projects.
For instance, CoinGecko reports that The Sandbox’s token (SAND) has a market capitalization of $769 million, while Decentraland’s token (MANA) has $699 million.
The recent pressure on popular profile picture (PFP) collections reflected the overall state of the NFT market. According to DappRadar, the NFT market experienced a 38 percent quarterly decline, amounting to just under $3 billion.
The decrease in the price floor of these collections has negatively affected collectors who sought liquidity by using Bored Apes as collateral. To facilitate NFT-backed loans, BendDAO, a lending protocol, recently auctioned off 27 Bored Apes and 25 Mutant Apes, as reported by Protos.
Gabe Frank, a co-founder of NFT lending protocol Arcade, explained that some investors had become over-leveraged. It was difficult for them to repay their loans, resulting in forced sell-offs on specific platforms.
The situation led to mass liquidations. Blur, an upstart marketplace with its own NFT lending protocol, and Azuki’s missteps with the Elementals collection are said to be contributing factors. The consequences of these liquidations have been significant, causing a ripple effect throughout the market.
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