According to DappRadar, the day after the collapse of Silicon Valley Bank, the number of active Non-Fungible Token (NFT) traders fell to its lowest point since November 2021, affecting collections such as CryptoPunks and Bored Ape Yacht Club. Let’s see what happened.
CryptoPunks Non-Fungible Tokens attempt a recovery
Last Saturday, the day after the Federal Deposit Insurance Corp took control of Silicon Valley Bank, there were only 12,000 active NFT traders, according to DappRadar, a number not seen since November 2021.
There were 33,112 individual NFT traders that day, the lowest daily count so far in the year. Since the beginning of March, the volume of non-fungible token trades has declined 51%, with sales down about 16%, DappRadar says.
However, not all collections of non-fungible tokens have been affected in the same way. In fact, projects from NFT issuer Yuga Labs, including Bored Ape Yacht Club and CryptoPunks, saw their minimum prices drop slightly Saturday, but prices quickly recovered.
One Twitter user compared CryptoPunks to USDC, arguing that it was more stable than the stablecoin, which lost its peg to the US dollar after the collapse of Silicon Valley Bank.
Specifically, the bank failed after selling most of its holdings at a loss to deal with a flood of withdrawal requests from customers. Sara Gherghelas, research analyst at DappRadar, said Yuga Labs’ success was amplified by its investment in CryptoPunks and its ability to build a community.
While the company said it has limited exposure to Silicon Valley Bank, its token holders have not made big moves on the news. Gherghelas stated on the matter:
“They have a very clear road map, the team is visible and they have decided to make a good project after the Ape ecosystem. They keep building. They are proving that if you are a part of their community, they have so many advantages and benefits.”
SVB drags with it some NFT collections: let’s see which ones
Not all collections made it through the collapse of Silicon Valley Bank unscathed. Shortly after the news broke on 10 March, Proof, the NFT collective behind the popular Moonbirds collection, took to Twitter to share that the company had some funds invested in Silicon Valley Bank, sparking uncertainty among holders. As stated:
“A statement from the PROOF team regarding SVB: Many of you saw the headlines this morning about the closing of Silicon Valley Bank. The most important thing for us, in good times and bad, is to communicate with our community proactively and transparently.”
Proof continues on Twitter:
2/5: In the spirit of transparency, here’s everything we know about the situation with SVB:
Proof holds cash at SVB, however…
We’ve thankfully diversified our assets across ETH, stablecoins, as well as fiat—so financially and operationally, we’re going to be OK.
— PROOF (🥃,🦉) (@proof_xyz) March 10, 2023
Over the weekend, Moonbirds lost about 18% of its value, according to DappRadar. One large holder sold 500 Moonbirds on Saturday, suffering losses of between 9% and 33% for a total of more than 700 ETH, or about $1.1 million.
Gherghelas said that, while news of Proof’s exposure to Silicon Valley Bank contributed to the uncertainty in the project, holders were pressured to sell because of the company’s shortcomings in recent months.
After canceling its Proof of Conference scheduled for May, the community remained uncertain about the company’s ability to deliver on its promises. In fact, Gherghelas concluded:
“People, users and consumers are getting more selective and they don’t want hype, they want the perks, benefits and utility behind that NFT collection.”
What is the exposure of CryptoPunks Non-Fungible Tokens to SVB?
As we now know, the Silicon Valley Bank (SVB) fallout on Friday sent shockwaves throughout the crypto and technology industries, leaving many companies uncertain about their financial positions.
However, Yuga Labs co-founder Garga reassured the community that their event would have no impact on their business. In a recent statement, Garga provided much-needed relief to Yuga Labs investors.
According to Garga, Yuga Labs has “super limited exposure” to the now-bankrupt bank. This means that the company’s finances will not be significantly affected by the fallout. Garga also acknowledged that other cryptographic and technology companies may not be so lucky.
On the other hand, Yuga Labs has already proven to be proactive in protecting its finances. During the FTX fallout in November 2022, co-founder Gordon Goner reassured the community that the company’s money was safe.
According to him, the funds were held in Coinbase Custody, bank accounts, and T-Bills. Goner also revealed that the company had transferred its money from FTX.us before the fall. This demonstrated Yuga Labs’ commitment to financial security and risk mitigation.
Source: Crypto News