How the FTX Bankruptcy Strikes the NFT Market: Solana NFTs as a Case Study

How the FTX Bankruptcy Strikes the NFT Market: Solana NFTs as a Case Study
How the FTX Bankruptcy Strikes the NFT Market: Solana NFTs as a Case Study

Until its collapse, FTX was the second biggest crypto exchange platform, only trailing behind Binance, the world's largest. But amid the bearish market and many internal crises, investors' businesses took the wrong course when FTX filed a chapter 11 bankruptcy on November 11, 2022. There have been concerns that the FTX collapse will drag the crypto market further down the drain, with a grippy negative effect on NFTs.

How will the FTX bankruptcy affect the NFT market? And what does it mean for the future of NFT trading?

The FTX Bankruptcy Might Discourage Potential and Existing NFT Investors

According to IntoTheBlock's tweet, as of April 2022, there are over 80,000 NFTs in the Ethereum blockchain alone.

FTX had over 1600 NFT collections on its marketplace before it tripped off. That's a measurable proportion of the total NFTs available in web 3.0, considering the FTX marketplace accommodates some of the most popular and expensive NFTs. This might negatively impact the value of NFTs listed on FTX—most of which are Ethereum-based and owned by Whales.

For instance, the Bored Ape Yacht Club (BAYC) NFT, which has taken a beat down to less than 70 Eth floor as of writing, is one such NFT drawing crypto traders’ attention. Coachella, a pricey NFT (1.5 million USD) housed on the FTX platform, also got stuck with the abrupt shipwreck.

It looks more like the FTX implosion affects specific NFTs rather than the whole after all. A recent tweet by Eric Cryptoman reveals that 121 BAYC NFTs were stolen due to a fake sex tape link shared by a hacker group.

This showdown doesn't directly affect NFTs on other platforms. But it discourages investors from holding on to dear life (HODL), encouraging them to sell rapidly for fear, uncertainty, and doubt (FUD). Additionally, new buyers tend to stay off the NFT market as news of the FTX effect flies around. And that's where Solana NFTs might feel the FTX bankruptcy effect. But the bet is that this event won't sway experienced traders from making the best financial decisions as far as NFTs are concerned.

The FTX Implosion Might Not Significantly Affect Solana NFTs After All.

Although some Solana NFTs plummeted during the FTX collapse, some are already kicking back to life. And you can't conclude whether they were affected by the FTX saga or some only took a natural market course.

According to Moonly stats, the Y00ts NFT floor jumped from 56 Sol to 68 Sol between November 10 and 11 (while FTX sinks). As of writing, the Y00ts NFT floor stands at 98 Sol.

Yoots NFT screenshot Moonly

The Solana Monkey Business is also 14% higher (as of writing) than it was pre-FTX collapse (from 168 Sol to 197 Sol).

Moonly SMB screenshot

The Degods NFT also rose from 221 Sol to 266 Sol between November 11 (when FTX declared bankruptcy) and November 19.

Moonly Degods screenshot

And according to a press release on the Solana website, the firm never stashed any Sol on FTX. It further claimed that the cash amount locked up on FTX only accounts for one percent of the Solana Foundation cash or its equivalent.

How Badly Has the FTX Bankruptcy Affected the Crypto Market?

FTX had a significant funding influence on the Solana layer-one blockchain. Approximately 1 million USD worth of Solana tokens is trapped in the collapse. An event believed to have plunged the Sol price to 13 USD compared to its 18 USD floor pre-FTX bankruptcy. But Solana isn't the only blockchain taken by the mess.

However, in a rather non-myopic view of the drama, the effect spreads over the entire crypto market cap, which took a free dive from over 1 trillion USD to 836.89 billion USD after the FTX fall. Many investors believe that the FTX bankruptcy resulted in NFTs dipping their numbers on various marketplaces.