Three cases of bank collapse have recently occurred and affected the NFT market. These banks include Signature Bank, Silvergate, and Silicon Valley Bank. This event resulted in strict regulations, economic downtrend, liquidity crisis, and failure to meet customer withdrawal requests.
Following the collapse of digital bank Silicon Valley Bank (SVB), DappRadar reported a drop in trading volume for non-fungible tokens (NFTs).
The Impact of SVB Collapse on NFT Trading Volume
According to data aggregation platform DappRadar, the collapse of SVB has sent shockwaves throughout the cryptocurrency industry as investors begin to evaluate their risk exposure to various digital assets. The incident brought the total number of token traders out of business to its lowest level since November 2021, down to around 11,440.
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At report from DappRadar stated that NFT trading volume fluctuated between $68 million and $74 million before the collapse of Silicon Valley Bank on March 10. By March 12, that number had dropped to $36 million. The decrease in trading volume is a 27.9% decrease in daily sales of non-fungible tokens, which was recorded between March 9 and 11, 2023.
Before 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 the sudden collapse, many NFT projects are now struggling to secure funding and liquidity, which is the main reason for the decline in trading volume.
The report also highlights the impact of the broader cryptocurrency market downturn, which has seen major assets like Bitcoin and Ethereum lose significant value in recent weeks.
This may have caused 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 de-pegging of the USD Coin token, traders’ attention has shifted from the nonfungible token market, as it fell to $0.88.
Blue Chip Market Value Remains Intact
The decrease in NFT trading volume does not affect the value of nonfungible blue-chip tokens. Despite the decline in recent NFT trading volumes, blue-chip NFT values remain unaffected, based on market watch.
Blue-chip NFTs are high-end digital assets that hold their value despite the overall downturn in the NFT market. While the total trading volume of NFTs dropped to $36 million, blue chips including CryptoPunks and Bosen Apes Yacht Club (BAYC), have maintained their value, albeit at a low price.
according to for Greg Solano, co-founder of Yuga Labs, the company’s financial status is not overly exposed to Silicon Valley Bank. This could be the reason for the immunity of these blue chip non-fungible tokens to the declining trading volume of the broader non-fungible token market.
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In addition, non-fungible blue-chip tokens provide a unique opportunity for creators and artists to monetize their work in the digital age, creating new revenue streams in an era when technological advances are disrupting traditional revenue streams.
Based on the DappRadar report, the fall of Silicon Valley Bank and Signature Bank has affected the crypto industry, especially the decentralized application ecosystem. These events increase the need for the digital currency space to stop relying on regular banking infrastructure and become more independent.
Featured images from Pixabay and charts from Tradingview.com