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The information contained in this NFT Scoop newsletter or podcast is not financial advice, it is provided for educational, informational, and entertainment purposes only.

The information contained in or provided from or through this website and podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

NFT’s can be highly illiquid markets, causing sharp drops in prices due to changes in narratives and trends.

Scoops of the Week 🍦

MicroStrategy Plunge

Michael Saylor's company MicroStrategy (MSTR) (which develops software to analyze internal and external data in order to make business decisions and to develop mobile apps) is currently holding a substantial paper loss of more than $1 billion on its bitcoin holdings as the price of the largest crypto dropped heavily to $23,809.83 which is the lowest price since December 2020.

Saylor has not been shy in disclosing his bullishness regarding Bitcoin, his latest profile picture update on his Twitter page confirms as much. Transactions will show that Saylor began purchasing bitcoin through MicroStrategy in August 2020 at a price just under $12,000 which was just before the largest surge was to occur. Continued purchases brought the company's holdings to 129,918 bitcoin, now valued at precisely $3,083,414,049.72 (just shy of $3.1 billion) compared with what's a near-$4 billion investment.

The knock-on effect of the heavy reduction in Bitcoin, a 63% reduction from the all-time high of $63,326.99 can be felt in the price impact on MicroStrategy. The company’s price closed on Friday 10th June at 202.87 and opened on Monday 13th June at 155.57 before hitting a low of 148.97. The price has now risen to 159.31 but the heavy dent can be epitomised by the below chart.

On the company’s quarterly earnings call which took place May 3rd, 2022, MicroStrategy CFO Phong Le stated that the company would face a margin call if bitcoin’s price fell to about $21,000. A margin call would obligate the company to sell some of its bitcoin holdings. As the price is flirting dangerously close to the trigger figure it will be intriguing to see how the company proceeds.

Celsius Halts Payments

Celsius which is a Cryptocurrency lending firm Celsius Network announced on Twitter that the company will pause withdrawals and transfers between accounts due to extreme market conditions.

The announcement can be found here.

The main extract that requires more of a review is “Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible. There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.”

The company which raised $750 million in funding late last year, is one of the largest entities in crypto lending. They offer interest-bearing products to customers who deposit their cryptocurrencies with them and lend out cryptocurrencies to earn a return. For the company to effectively cease its operations (which contradicts what they released in their statement) is causing huge concern amongst users who fear that the lockout will cause long-term financial harm. Users are especially disgruntled with the fact that the company moved $320m to FTX before pausing withdrawals.

Unfortunately, whatever happens, a ton of damage is occurring to the Crypto Ecosystem as a result of the above and we wish to see a fast, healthy resolution.

NFT Restraining Order

International Law Firm Holland & Knight which specializes in litigation, business, real estate, and government law stated on Twitter that they have become the first law firm to serve a defendant in a hacking case with a temporary restraining order through an NFT marking this the first known legal process to be facilitated by an NFT.

The NFT was served to an unnamed defendant in a hacking case involving LCX, a Liechtenstein-based cryptocurrency exchange that was hacked in January for almost $8 million.

LCX has applauded the methods used by their solicitors and announced that this method “was approved by the New York Supreme Court and is an example of how innovation can provide legitimacy and transparency to a market that some belief is ungovernable,”

Due to the ongoing legal issue, we are unable to comment on the case, however, a large cloud surrounding the space generally is the lack of governance so to see the laws of the land being used on multiple occasions such as this, intellectual property matters and insider trading may provide some comfort to those who are concerned with the lack of legal protection. As the space continues to evolve at a fast-paced rate, there is no doubt further elements of the law will surface.

Seth Green Saga Coming to an end?

Our Newsletter of 31/05 provided an in-depth timeline of events surrounding Seth Green’s stolen Bored Ape.

As previously reported to you, the ape was to feature in a new TV series called "White Horse Tavern." However, following the initial theft of the NFT, the actor was adamant that he still owned the licensing rights for the ape and was going to proceed down the legal routes of recovery.

Well, we will never know how the law would have decided on Green’s case as the actor has paid 165 Eth to have the NFT returned. The initial announcement was made in a Twitter Space for his NFT company PizzaBot where he declared that the ape "is home."

After what can only be described as a stressful time for the actor, he will certainly have a wide audience for the TV show that was initially put on hold.

We wish to remind you of all of the potential phishing attacks in the space and always make sure what you are clicking on, connecting your wallet to, and or allowing access to is fully checked out by yourself to ensure incidents such as theft do not occur.

Winner’s Circle 🏆

Given the current state of the NFT market combined with the heavy decline in ETH we are going to focus on a project that retained strength and resilience throughout this dip benchmark of different factors that all NFT projects can aim to achieve.

The Project is Proof Collective.

We choose them because at a time when we are seeing floors dump and holders taking liquidity out of NFT’s the project is staying strong stats-wise.

For example, BAYC has seen its floor drop from 95 ETH to 75 ETH with 78 sales over the last 7 days and a further 793 (7.93%) currently listed for sale.

Compare this to Proof Collective where there is a maintained bullishness amongst holders with only 11 items until a 100 ETH floor and only 5 items until it’s previous setting of 75 ETH. There have been only 6 sales in the last 7 days, 3 of which came in the last 24 hours. Only 1.8% of the project remains listed for sale.

Why is this the case?

First and foremost, the community. When a community is loyal , which is clearly the case for Proof Collective, holders will stay loyal bull or bear. There is evidently a really strong bond and an element of trust created between those that run the project and those that invest. This is the first core of a successful long-term project (blue chip or not) you must have your core community. Whether this is maintained by aligned visions, and honesty about where they are and where they want to be, loyalty runs both ways and it is clear Proof Collective has this.

Secondly, expansion. You can see on Twitter, that project is continuing to grow by adding to its team. If you are standing still, you are going backward. Further, once a new member joins the team, the project dedicates a tweet advising of who is joining, and what they will be doing and there is a real family close-knit feel about a new recruit’s introduction.

Finally, value. For a project to be continually successful, it must provide value to its investors. In essence, the project is a massive utility tool. Their website confirms this - “To join, one must hold the PROOF Collective NFT. Membership includes access to our private Discord, early access to the PROOF podcast, in-person events, and other collaborations created exclusively for PROOF Collective members.” I am unable to comment on the specifics of what is being provided to members however you can use the stats to establish that value is being received. With only 16 sales in the last 30 days and only 1.8% of the collection being listed for sale it is clear members aren’t leaving in flocks and are there to continually receive their value.

All in all, a hard week for projects across the space, given the uncertainty we do not know when it will get better or how much further the struggles, can continue. What can be said is, that the principles listed above can be achieved by any new and or existing project. Community, expansion, and value. 3 cores for a long-term successful project.

Bi-Weekly Market Update ✔

With poor crypto market conditions, and worsening macro-economic conditions the NFT space took another hit this week. Floor prices dropped around 50% across the board as holders began to sell off their portfolios amidst panic. Moreover, volume decreased across the space due to the continuing lack of liquidity amongst investors and many leaving the space altogether. Finally, project listings skyrocketed this week as investors began to offload items in their portfolios that are performing poorly. Later in the newsletter, we have written a detailed article surrounding the current state of the NFT market. While things don’t look great it is important to look to the long-term and understand that this is a healthy cycle. The space will come back stronger but after hundreds of poor quality projects draining liquidity for months now, it is not only a healthy cycle but a cycle that is needed.

The Current State of the NFT Market 🐻

Liquidity & Volume

Since the beginning of May, NFT volume has been a gradually increasing problem in the NFT Space. There has been a general lack of liquidity in the space after a number of expensive mints, collapsing floor prices, and scams along the way. On the 1st of May, we saw a volume of $476m traded on Opensea. On the 13th of June, the volume stands at $19m traded. This is a severe fall-off and has been seen almost every day over the last month and a half. In regards to monthly volume, we peaked in January. In January there was just short of $5bn traded on Opensea. Last month we saw this fall to around $2.5bn and so far this month we have had just $372m. This puts this month on track to not even make it to $1bn traded. Again, a significant downtrend. As we will explain later in this paragraph, with the current market conditions it does not look like masses of volume will be returning anytime soon. Especially to the levels, we saw in the NFT ‘bull market’. This is something we will be closely examining in the newsletter from here on out.

OpenSea Users

Another tell-tale sign of the poor market conditions we find ourselves in can be seen through the stats regarding active Opensea traders. Since the January volume peak, we have seen a steadily declining active Opensea trader base. In January 546k traders made an Opensea transaction, by March this figure had fallen to 451k and by May we saw 422k. This month there have been just 249k users on Opensea who have made a transaction. Which will likely see us finish the month lower than May. This suggests people are losing interest in the short term and have begun to run out of available liquidity. However, the worst of this is yet to be seen. Users remain high as people try to sell their portfolios in panic. It is likely the Opensea active userbase will contract more as more liquidity and volume leaves the NFT market.

Crypto Prices

Many NFT investors consider both Floor price combined with the price of ETH / Solana to judge how well an NFT is performing. However, over the last few months, this has been short-sighted. Most NFTs have not outperformed the decline in the value of cryptocurrencies. This week Ethereum has fallen 32%, Solana 26%, and Bitcoin 23%. NFTs just cannot outperform these losses in value unfortunately, dips in price aren’t the fault of NFT projects themselves this is just unfortunately a knock-on effect of the crypto space. As crypto continues to down-trend this cycle will continue. NFT’s lose monetary value as crypto loses value, investors panic sell and undercut each other to sell first. This creates a condition where NFT’s are losing value at a faster rate than crypto itself. We saw the flipside of this during the crypto bull run when NFT’s first started gaining traction. The value projects were gaining was explosive and from January to April NFT’s were outperforming crypto by some margin. It’s most likely going to be a rough few weeks to a couple of months if this continues to happen but it will ultimately lead to bargain blue chips. A month ago you may never have believed you could own a Bored Ape, next month this may become extremely affordable to do so. There is no longer an NFT project with a floor above 6 figures. This is crazy to write, because just over a month ago the floor of Bored Ape Yacht Club was almost 500k, while Azuki, Moonbirds, and Punks were all comfortably over 6 figures in value.

Macro-Economic Factors

The main cause of all of the above is the macro-economic factors that are affecting the whole world right now. If you read traditional media or even crypto Twitter it would be difficult not to have some gauge of what is going on with world economics at the moment. To summarise I will bullet point some of the economic factors that are currently impacting the stock market, crypto, and almost all traditional currencies right now.

1. Tightening Monetary Policy in the US, UK, Canada, and the EU

2. Decreasing US Equity Prices

3. Increasing Inflation Rates

4. Interest Rates At Decade Highs

5. The War in Ukraine

6. The Cost of Living Crisis

7. Increasing Murmurings of an Impending Recession

8. Chinese Economy Slowing

These are just some of the many economic problems the world is currently experiencing. Factors such as these make investors less likely to hold onto illiquid assets such as NFT’s and begin to stockpile their money into high-interest rates.

NFT Scoop Comments

Ask yourself, during the worst financial crisis since 2008, will people be being 6-figure jpegs and putting their life savings into crypto? No? well, this is just a cycle and we will come back even stronger. This is healthy and will create generational opportunities for everyone in the space. The best thing is NFT Scoop will be here to help you. Bear or bull.

New NFT Scoop Contributor - Rinzler0x

Hi Scoop Fam, My name is Rinzler0x. I’m a Web3 Lover, Investor and Builder - specializing in NFT’s and analysis; I’m also a friend of NFT Scoop. Currently, I’m navigating the bear market by researching and participating in communities and projects. I’m excited to share my knowledge and activity with you guys. I know NFTscoop has mainly focused on Eth with a dash of Solana, but I’d like to give you a taste of Polkadot, and Gavin Wood.

Gavin Wood will blow you away! Most people I speak to in Crypto/NFTs don’t know Gavin Wood but he actually coded Ethereum - not Vitalik. I’ve heard some sources say Gavin coded Ethereum in a weekend. Besides the point, he invented the Solidity programming language, which most blockchains are built on, with that in mind he is a pretty impressive and important dude and one of the best builders in the web3 space and coined the term ‘Web3’. Following his time at Ethereum, he left to create Polkadot

What is Polkadot (DOT) really?

Polkadot is a Layer0 network protocol and ‘relay chain’ that allows blockchains (‘parachains’) to talk to each other by plugging in. This allows for specialized chains to relay data between each other; You can move gaming NFTs between gaming specialized parachains, or you could collateralise it for a loan on a DeFi specific chain. Polkadot is just getting started! Most of the Polkadot Community is excited about Kusama. Okay, so WTF is Kusama (KSM)? (Rinzler’s Favourite) Kusama is the wild cousin of Polkadot, they share almost identical DNA. Kusama can be described as a playground for developers and the birthplace of communities. Projects experiment, take risks and move fast on Kusama before deploying on Polkadot. Next week I’ll share my favorite NFT project in the DOT/KSM ecosystem.

Rinzler0x’s Recommended links

Gavin Wood Wiki

Polkadot Website / Kusama Website

RMRK Website