There have been three cases of bank collapse recently that have affected the NFT market. These banks include Signature Bank, Silvergate, and Silicon Valley Bank. This event was the result of strict regulations, an economic downturn, a liquidity crisis, and non-compliance with client withdrawal requests.
Following the recent collapse of digital bank Silicon Valley Bank (SVB), DappRadar reported a significant drop in non-fungible token (NFT) trading volumes.
Impact of SVB Collapse on NFT Trading Volumes
According to data aggregation platform DappRadar, the SVB collapse has shocked the entire cryptocurrency industry as investors begin to reassess their risk exposure to various digital assets. The incident brought the total number of non-fungible token traders to its lowest value since November 2021, falling to around 11,440.
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He reports from DappRadar stated that NFT trading volumes were fluctuating between $68 million and $74 million before the fallout from Silicon Valley Bank on March 10. As of March 12, the figure dropped to $36 million. The decline in trading volumes was a 27.9% drop in daily sales of non-fungible tokens, recorded between March 9-11, 2023.
Until now, Silicon Valley Bank was seen as a key player in the non-fungible token market, providing critical financial infrastructure and investment capital for various projects. With their sudden collapse, many NFT projects are now struggling to secure funding and liquidity, which is the main reason behind the drop in trading volumes.
The report also highlighted the impact of the broader cryptocurrency market downturn, which has seen major assets like Bitcoin and Ethereum lose significant value in recent weeks.
This fact may have led many investors to shift their focus from riskier assets like NFTs to more stable assets like gold and government-backed currencies.
The report added that in response to the unpegging of the USD Coin token, traders’ attention turned away from the non-fungible token market as it fell to $0.88.
Blue Chip’s market value remains intact
The decline in NFT trading volumes did not affect the value of top-tier non-fungible tokens. Despite the recent decline in NFT trading volumes, the value of top-tier NFTs remains unaffected, according to market observation.
Tier 1 NFTs are high-end digital assets that have retained their value even as the broader NFT market experienced a downturn. While total NFT trading volumes were down to $36 million, blue chip firms including CryptoPunks and Bored Apes Yacht Club (BAYC) have maintained their value, despite there being a slight decline in their prices.
Respectively For Greg Solano, co-founder of Yuga Labs, the company’s financial state is not overly exposed to Silicon Valley Bank. This could be the reason for the immunity of these top-tier non-fungible tokens to declining trading volumes from the broader non-fungible token market.
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Apart from this, top-tier non-fungible tokens provide a unique opportunity for creators and artists to monetize their work in the digital age, creating a new revenue stream in an era where technological advances have disrupted revenue streams. traditional.
According to the DappRadar report, the fallout from Silicon Valley Bank and Signature Bank has had a dramatic impact on the crypto industry, especially the decentralized application ecosystem. These events have raised the need for the digital currency space to become less dependent on regular banking infrastructure and become more self-sufficient.
Featured image from Pixabay and graphic from Tradingview.com
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