Advisory
This document is not financial advice and is for education purposes only. Always do your own research before investing or trading cryptocurrencies.
Introduction
Welcome to the sixth edition of the Step Finance Newsletter. Over the past week, the Solana cryptocurrency ecosystem has seen positive price action, with numerous cryptocurrencies seeing positive price action, as shown below.
This positive price action is believed to have been driven by US inflation figures being better than expected, with an easing on petrol prices, driven by a decrease in oil prices (e.g. Brent Crude Oil down -20%), triggering bullish stock market movements, displaying the overarching effect the traditional markets are currently having on the cryptocurrency market.
Despite this, we remain in uncertain and fearful economic times. This fear has translated into the cryptocurrency market, confirmed by the current fear and greed index reading (42/100). Therefore, it would seem unlikely that NFTs would have been performing positively lately. However, this is not the case, with various Solana NFTs performing admirably. In this newsletter, we will dive into Solana NFT projects which have skyrocketed, and whether their price action is a result of single actors, or whether NFT communities are rallying together and are here to stay. All analysis within this newsletter will be conducted with SolanaFloor.
Bullish Breakout NFT Projects
We have identified four NFT projects which have seen a potential major bullish breakout over the past week in the Solana cryptocurrency space. These projects are displayed in figure 3.
On average, these projects have a seven day SOL performance of +65.94%, outperforming the top Solana ecosystem cryptocurrency SAMO by a difference of +44.79%. This displays significant confidence in the Solana NFT ecosystem, showing that interest in Solana NFTs continues.
Where Was Demand?
Performance figures derived in figure 3 are based upon changes in the respective projects floor prices. Through utilising SolanaFloor (pro), we can determine the floor prices of each NFT project according to its rarity.
Jikan
With Jikan, we can see that the floor price of common backgrounds has been relatively consistent, as displayed in figure 4.
Despite this consistency, there have been significant price increase differences between the Jikan NFT backgrounds. This is displayed in figure 5 below.
During the same time period, uncommon Jikan background NFTs did not perform as well as common backgrounds, as displayed below.
Therefore, from background analysis, we can determine that the recent bullish outbreak from Jikan was triggered by individuals sweeping the floor of this NFT project.Â
Infected Mob
When evaluating the prices of Infected Mob, we can split the floor prices according to five rarity segments:
BackgroundÂ
Body
Skin
Eyes
Headwear
For Infected Mob analysis, floor prices according to ‘eyes’ rarity will be analysed. When analysing NFTs with common eye traits (x>3% distribution), we can see that all have seen bullish price action during the selected time period. Since the start, the price of these common eyes NFTs has converged. On 06/08/2022, the price spread was 19.10%. However, by 12/08/2022 the price spread was 4.00%, displaying a significant convergence in price.
Unlike the common eye traits, rare eye trait Infected Mob NFTs have a significant spread. On 06/08/2022, the price spread was 202.27%. However, like the common eye NFTs, there has been a convergence in price with the spread falling from 202.27% on 06/08/2022 to 114.59% on 12/08/2022. The major outlier on 12/08/2022 is ‘stapled vision’ eyes, as shown below.
Both sets of NFTs have seen major swings in terms of price action. However, the rarer NFTs have seen the wildest price swings, with a major price decrease of -48.12% midweek before a three day surge of +154.06%.
Despite these wild price swings and spread differences, the common eye traits and rare eye traits have seen a moderate positive correlation with an R value of +0.6345.Â
From analysis of Infected Mob ‘eye’ rarity NFTs, we can determine that buyers are interested in both the rare eye NFTs and common eye NFTs. This displays health in the recent Infected Mob rally which occurred.Â
Lotus Gang
In comparison, when evaluating Lotus Gang, we can see that there was increased demand for the rarer types of NFTs. Lotus Gang NFTs are split according to three types. These types are ‘undead’, ‘ascended’, and ‘human’. In the figure below is the breakdown of all Lotus Gang NFT compositions according to their types.
Interestingly, prior to the Lotus Gang ‘pump’ all of the NFT types converged to price at 4.5 SOL. However, since then we can see below that the rarest ‘ascended’ NFTs have performed the best at +66.66%, with the common ‘human’ NFTs gaining +33.33%, as shown below. Â
From this, we can derive that the price increase behind Lotus Gang is different to that of Jikan. In order to gain a deeper understanding of this, let's evaluate the primary wallets behind the recent bullish price action of Lotus Gang and Jikan.Â
Wallet Activity
When evaluating the wallet activity of Lotus Gang, we can see that 76.60% of all purchases can be identified to a single wallet address.
This wallet address has an extended history of wiping floors of various NFT projects and is currently holding an estimated value of 14,661.27 SOL ($629k USD). Previously the wallet held a significant amount of NFTs from the following projects:Â
EnigmaÂ
Okay BearsÂ
Rakkudo
Founders Coins.
The intentions of this wallet are unclear. However, wallet analysis does put a slight dampener on the recent bullish run by Lotus Gang. During this period, we can see that multiple Lotus Gang NFT whales were selling during the same set time period, as displayed below.
With few buyers and numerous whales selling, the Lotus Gang price increase seems likely to be temporary, and could fizzle out in the short term when evaluating wallet activities. We can also determine that the recent upturn from Lotus Gang is due to an individual anticipating major positive price action from Lotus Gang NFTs over an extended period.Â
In comparison, the wallet activity for Jikan is rather bullish. Over the past seven days, there have been a total of 83 NFT purchases across 16 separate wallets, averaging 5.1875 Jikan NFT purchases per wallet. From this, there are no major deviations, with the maximum purchase amount being 11 Jikan NFTs. This wallet activity is compared to 94 purchases spread over four wallets, averaging 23.5 NFT purchases per wallet, with major deviations from the average. Furthermore, as shown below, only 12.5% of these wallets have sold Jikan NFTs over the past seven days.
When we match the wallet activity with the demand for common Jikan NFTs, we can determine that there is retail interest in Jikan NFTs.Â
Conclusion
In conclusion, through wallet and rarity analysis (by utilising SolanaFloor), we can successfully gain a deeper understanding of the price action of NFTs. Furthermore, in the case of Jikan, we can determine that there are communities within the Solana NFT space which continue to thrive, and outperform various sectors across the cryptocurrency market.
Author: @page_analyst