Experts warn of NFT market collapse due to BAYC liquidation

DoubleQ, the founder of the Web3 platform DoubleStudio, has warned that Bored Ape Yacht Club tokens that collectors have placed on the BendDAO platform in exchange for ETH may be liquidated with a credit ratio of 1.01. There are currently 20 BAYCs on the market with a credit ratio below 1.1. DoubleQ believes that this could cause the NFT market to collapse.

By the way, the sales volume of the largest trading platform OpenSea is now at its lowest level since the beginning of the year. This means that it will not save BAYC from collapse. Borrowers will have 48 hours to repay the loans or their collateral will be liquidated.

According to DoubleQ, most of the Bored Apes owners facing liquidation bought their NFTs several months ago at a minimum price of 125 ETH. Amid the market decline, the price has dropped even further and is now hovering around 70 ETH. In order to withdraw their NFTs, collectors who used the tokens as collateral must repay the loan and pay interest.

BendDAO explains that part of the problem lies in the mechanics of NFT trading, where minimum prices are adjusted depending on the fluctuations in the ETH price. As a result, some BAYCs are liquidated at higher prices than they were bought.

Recently, we told you that the Bored Ape Yacht Club NFT collection fell to its lowest level since the beginning of the year. This happened amid a prolonged decline in the NFT market and the general collapse of the cryptocurrency market. Trading at 65.68 ETH, the minimum price of the Bored Ape Yacht Club NFT has fallen to a level not seen since January 2022.