If prices plummet in an illiquid market, how soon before anyone notices?
While fungible tokens traded on centralized and decentralized exchanges have significant transparency regarding price movements, nonfungible tokens can be harder to track. Because of their illiquid nature, gauging the sentiment of the overall market market for a project can be difficult — a dynamic that has led one eGirl Capital member, Mewny, to dub NFT corrections ‘silent crashes.’
i really like @mewn21 phrasing of NFT crash as a “silent crash”
in liquid markets, you can see prices going down every day. in NFT-land, sellers have slower “market reaction”. instead of sellers adjusting prices downwards everyday for a month, it may just -80% “overnight”
— tuba (@0xtuba) March 26, 2021
In a silent crash, speculators might not even be aware that one is underway — buyers simply evaporate and sellers fail to move their wares. However, metrics such as “floor price” — the lowest price at which a NFT can be bought for a particular project — as well as total volume can indicate that a bull is turning into a bear.
There could be bad news on the horizon for NFT collectors, too, as signsTitle: ‘Silent crash’ as price floors collapse across NFT space
Sourced From: cointelegraph.com/news/silent-crash-as-price-floors-collapse-across-nft-space
Published Date: Sat, 03 Apr 2021 23:43:05 +0100
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