Non-fungible tokens (NFTs) are rallying, and to those obsessed with rising prices, the market may appear to be booming. However, overall activity tells a different story.
Leading the rally are Bored Ape Yacht Club and Pudgy Penguins. Its floor prices, the lowest possible acquisition cost, have risen double digits in recent weeks, and its tokens have posted double-digit gains. Still, the recovery is occurring with far fewer buyers.
Pudgy Penguins floor has risen above 5 ETH, more than 20% on the week, with 201 sales and almost 1,000 ETH in volume over the last seven days supporting the move. BAYC’s floor is up 81% in the last 30 days, recovering sharply from depressed levels.
Floor prices are an important metric to follow. In an NFT collection, the floor price is the lowest priced item currently for sale. If the lowest priced Pudgy Penguin on the market is trading at 5.38 ether (ETH), that becomes the collection floor. A rising floor generally means buyers are willing to pay to get in. A falling bottom usually means holders are rushing for the exit.
But behind the headline price gains, the market structure tells a different story, as broad participation is shrinking.
According to CryptoSlam, global NFT sales fell to approximately $175 million in April from $304 million in February, while total transactions and active users dropped by almost half.
Meanwhile, average selling prices more than doubled month over month, going from $30.60 in March to $67.38 in April. Those two data points describe the same phenomenon from opposite extremes. A smaller pool of capital is focusing on high-value deals in blue-chip collections, rather than broad-based demand returning to the market.
Even within blue-chip companies, the quality of demand varies. Pudgy Penguins is experiencing relatively high transaction numbers along with rising prices, a sign of sustained activity. In contrast, collections like CryptoPunks have recorded similar weekly volume with far fewer transactions, implying that a small number of large transactions are having a huge impact on the price.
Broader market signals remain mixed. According to CryptoSlam, wash trading still accounts for approximately 50% of total volume, and aggregate trading profits remain negative, indicating that many participants are still underwater despite the recent rally.
Taken together, the data points to a market that is stabilizing but not yet expanding. Prices rise, but participation falls and activity is concentrated in a handful of collections.
At the same time, ETH is up about 18% over the last month and BTC is up almost the same amount. Part of what looks like an NFT-specific rally is simply a beta version of a risk-on move across crypto, with blue-chip collections priced in ETH catching the updraft along with everything else.
