JPEGs On Sale, Baby

The global crypto market lost over $1 trillion in value last week as the price of nearly every major token took a precipitous nosedive.

ETH, the native asset of the Ethereum network, is down to around $2,200 for the first time since July. Bitcoin hit a similar six-month low in the $33,000 range. Altcoins SOL, DOT and AVAX are all down around 40% just in the last seven days.

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With a dip in the market comes a wave of “takes” from crypto’s armchair prognosticators. Depending on whom you trust, these are either short-term macro trends (tech stocks like Peloton and Netflix are way down, too) or the first rumblings of a promised “crypto winter,” the kind of thing last seen during the post-crash environment of 2018.

Well, here’s another take – it’s a bad time to be a day trader, but it’s also a bad time for NFT flippers, whose gains and losses are typically priced in ETH. Even as the price has fallen, the average amount of ETH exchanged for non-fungible tokens in top collections has stayed relatively consistent.

The Consumer Price Index (CPI), which tracks an aggregate price of certain consumer goods, is a useful real-world analog here. People like to think of the CPI as a rough gauge for inflation – when the dollar is worth less, you’d expect dollar-denominated prices to go up. It rose 7% in 2021, through December, in the biggest spike since 1982.

That is to say, you’re probably going to be paying a little more for some of the consumer goods you use everyday.

Somehow, this logic doesn’t seem to apply to crypto’s top NFT collections.

A week ago, the “floor prices” (the lowest listed price for a token in a given NFT collection) for CryptoPunks and the Bored Ape Yacht Club, now the two priciest projects in the space, were 60 ETH and 82 ETH, respectively.

They’ve each crept up a little, from 60 ETH to 66, and 82 ETH to 86 – but these minor increases aren’t doing much to offset the massive dip in the price of ETH, which lost 30% of its value over the past seven days.

See also: The History of HODL

The same goes for other top NFT collections. The floor for Meebits, a 3D collection from the developers of CryptoPunks, has actually dropped over the past week, as has the floor for CyberKongz.

Average sale prices for tokens over the past seven days tell a similar story; minor increases and decreases here and there, but nothing that could really offset the dip.

So, why is everyone accepting less for these valuable NFTs across the board?

My sense is that it has to do with who’s actually buying this stuff. At this point, CryptoPunks and Bored Apes are the domain of hardcore crypto enthusiasts (VCs, full-time investors) and rich celebrities. Your average ETH trader, maybe a little less risk tolerant, probably isn’t focusing on these collections.

Hardcore ETH people tend to think of ETH on its own terms. Spend enough time in crypto and 1 ETH just starts to look like 1 ETH, as opposed to $2,200.

If you really believe in the thesis behind NFTs (and, by extension, the ETH backing most of the market), you believe in the viability of the tokens themselves. And if ETH is going up and we’re all going to the moon, you may not care about a short-term price correction.

What looks like a loss today could be seen as a bet on the long-term value of ETH. Nothing’s ever real until you sell, right?

For now, JPEGs are on sale, baby.