Bitter finger-pointing and recrimination are swirling and The market for Apes has been brutally hammered are just two of the signs that the Bored Ape Yacht Club (BAYC) has experienced a crash. What can we learn from this? The floor price of BAYC has declined to 27.4 ETH from a high of 153.7 ETH in April of 2022, a 82% drop. This has caused the value of individual Bored Apes and related assets to plummet, with Justin Bieber’s Ape dropping 95% from a supposed $1.3 million to just over $58,000.
The BAYC crash is not unique, as many crypto-assets have experienced wild run-ups and crashes over the last few years. However, there are lessons to be learned from this particular crash that are specific to BAYC. The lack of goodwill towards Apes, both within crypto communities and more broadly, is now translating directly into weaker financial support for the assets. This is because the community of holders really matters to the value of these things.
The aggressive marketing of BAYC to a mainstream audience, such as the infamously awkward Paris Hilton segment on Jimmy Fallon’s Tonight Show, is one of the reasons BAYC came in for such scrutiny among crypto veterans. This kind of inorganic marketing can inflate an asset market, but also makes it more fragile. It can mean winding up with a lot of low-conviction holders who don’t actually understand the value proposition of what they’ve purchased.
The most mortifying stories coming out of the BAYC community right now are of people who used their Apes as collateral for loans, and are now getting liquidated as BAYC values drop. This is a reminder that it is a bad idea to go into debt against a volatile asset, crypto or not.
The most conservative way to think about this is that if other people are already making crazy amounts of money on a bet, it’s almost certainly too late for you to catch even the crumbs of that surge. This goes double for community-oriented NFTs, because if you’re aping into a rising asset in the expectation of future returns, everyone around you is probably doing the same thing.
In other words, the Bored Apes are now simply reaping what they sowed: that is, not very much.