What's Causing the NFT Floor Price Increase?

Floor prices for NFTs on Entrepot are growing fast... what's causing it

Background

The floor price for BTC Flowers, while increasing steadily from 23JAN to 05FEB, suddenly jumped to almost 100ICP on 06FEB, and has continued to climb since (it’s currently at 275 ICP). Then, starting on 07FEB, the floor price for many of the other “blue chip” NFT projects (PokedBots, ICPunks, Cronic Critters, DSA, MemeCake, ICApes) started rising rapidly as well.

So what kicked off this buying spree?

Fact 1 - The buying spree started with huge inflows to BTC Flower.

See the chart below. Notice that on 06FEB, there was a huge increase in transaction volume for BTC Flowers on 06FEB. Then, that volume decreased for BTC Flowers, but increased for the blue chips.

Fact 2 - The buying spree for BTC Flower on 06FEB was concentrated.

The bulk of that BTC Flower buying on 06FEB was by 5 wallets. There was a total of 14k ICP in BTC Flower transactions on 06FEB, so the top 5 wallets made of 42% of that.

Fact 3 - The buying spree for blue chip NFTs has been more spread out.

However, after the 06FEB BTC Flower spree, buying across other projects was much more spread out in terms of buyer’s wallets and NFT projects. The below table is transaction volumes from 07FEB through 14FEB with BTC Flower buys filtered out. Note - as the chart in fact 1 shows, buying for BTC Flowers has remained healthy even at the higher floor prices.

It’s clear that sellers of BTC Flowers on 06FEB, spread their profits around the NFT ecosystem.

Fact 4 - The craziness was not from new ICP entrants.

Of the wallets shown in Fact 2, all but one had ICP transactions prior to BTC Flower’s launch on 23JAN, suggesting that the floor price rise in February is mostly IC community driven… not whales coming over from other chain’s NFTs. Side note - let’s do a better job of getting NFT collectors/flippers from other chains!

Fact 5 - The ICP to kick off the 06FEB craze came from exchanges

If you look at the transaction history of the 5 wallets above, you’ll see the ICP for the 06FEB transactions came from accounts thought to be owned by crypto exchanges. This is great, because it means that the liquidity pool for the NFT market is growing at the expense of the liquidity pools for the exchanges.

Fact 6 - There’s reason to believe this can continue to run

Looking at the most active wallets since 12FEB, most of them also have recent large (>100ICP) transfers of ICP from wallets thought to be owned by exchanges. So, what started as a few whales purchasing BTC Flowers on 06FEB, has transitioned to a general bull market for all NFT projects, with funds coming from outside of the market to continue the bullish trend.

Fact 7 - I enjoy writing these articles

However, my time is limited now for hobbies and I am curious whether there is a market for data-driven analyses on NFTs or any other IC topic. If you like these articles, and want to encourage me to consider doing something more substantial, feel free to drop an ICP token of appreciation in one of my Stoic wallets: 207b40355bdb37ff7620c9061c91ce47643b475f67d81bb9d6fb267ce7c860f7. I’m looking for market signals that suggest that I can earn a living through IC-related data analyses.

Happy trading!