BoredApe NFTs at the Threat of Liquidation, Thanks to the Borrowings

Beware of the high chance of liquidation and drastic impact on the BoredApe NFTs in the future

In the present crypto market in which anything can happen anytime, some with unforeseen consequences, the latest occurrence is the possibility of liquidation of the BoredApe NFTs anytime. Reports are circulating from different quarters that amidst the debt crisis, or rather because of it, the time may be ripe for a massive liquidation event. The event is not only going to have disastrous effects on BoredApe NFTs but it is going to adversely affect the crypto market as a whole.

Simply put, US$5.3 million worth of BoredApe NFTs are at risk of being liquidated. A significant number of owners of the precious NFT, who were liberally using them as collateral to take out loans in Ether, have not repaid their debts. The borrowers were given 40 hours to repay the debt and prevent the liquidation event. But experts point out that it does not stand much chance as the volume, which can act as a buffer, is not large enough to reverse the trend.

The already complicated scenario is further made complex by the fact that the auctions cannot be initiated unless the first bid is made. With the unfavorable prices prevailing, there is not much to do to activate the NFTs which are in a sort of paralyzed state and face the death-like prospect of being compulsively sold. To reiterate, this does not only impact the BoredApe NFTs but also their counterparts in the crypto market.

The short-term fluctuations can be managed by various strategies but this is a long-term phenomenon. Going into more specifics, the slide in the floor prices in recent months has been so much that 45 of the 272 Bored Apes with BendDAO loans tied to them are seeing red, being in the "danger zone" of the platform. Most Bored Ape holders at risk of being liquidated bought their ape pictures months ago when the floor price was 125 ETH. It's since fallen to just above 70 ETH. There lies the catch.

Though BenDao, the peer-to-peer lending service that lets users borrow ether (ETH) against their NFTs, is issuing assurance that the collapse will not be imminent as it is being made out to be by market watchers the development has led to cynical comments like NFTs being "worthless are worth less now". 'Condolence messages' are also coming in flooding from the crypto market. There are, however, some who are arguing that buying out the NFTs at cheaper rates at this juncture will be a worthy move. One may go any way one likes about it but the crux of the matter is that BoredApe NFTs are under liquidation threshold for sure.