Liquidity came to Bored Ape holders in a big way! In one of the worst kept secrets, Ape coin was launched earlier this month. So many have already claimed, I don’t need to address the specifics. I’m sure you have heard all about it by now. The big questions now are what is the future of $Ape, how high/low can it go and is it a worthwhile investment if you were not lucky enough to be the beneficiary of a claim?
Personally, I was on vacation when it launched, hoping it didn’t fall apart before I arrived back home and would be able to claim as a Mutant Ape holder. One of the unexpected advantages of this, is it allowed me time to watch what was happening, with no emotion trying to get me to act since I had no access to my wallets while away. One of the first surprises to me was the post launch price pump held up better than I expected it would. My friend and collaborator Crypto Crier likes to use a rule of 150 days. Simply put, he says it takes about 150 days of post launch activity on a coin or token to get a real sense of what fair market value of it will/should be. Given I trust his opinion and don’t feel like doing a deep dive into this research myself right now, I am going to say this is true.
So if it is too soon to get a good feel for fair market value of the the coin, what can we conclude right now? Well, for starters the coin has been receiving huge volume and had a day one listing on most major exchanges. A quick snapshot of its top trading pairs by volume as I write this:
This is significant and important as it immediately had the eyes of retail investors who aren’t tied into the broader DeFi market. When you compare this to another relatively recent and semi successful claim Looks Rare, (whose launch I wrote about here) $Looks relies upon its Uniswap Eth pool for nearly 40% of its volume. Eth on a DEX is the currency of those deeper in the echo chamber of crytpo. Stable coins and credit cards on centralized exchanges is where the retail money sits. Think of them as the non committed folks where mass adoption will eventually come from.
Those of us deep in the crypto echo chamber often forget how early we actually are and how little overall liquidity exists on chain right now relative to the overall economy. This point was stated repeatedly at the recent Senate hearings as many crypto-naive senators were trying to figure out if Russian Oligarchs could use crypto to bypass economic sanctions. The answer they were repeatedly given by the experts was a resounding NO as not enough liquidity currently exists in crypto, but that is a topic for another day. Projects wanting to differentiate long term need to bring new liquidity to the chain, not continually fight over the small % that exists among early adopters. It was therefore noteworthy to me (yet mostly flew under the radar) seeing MoonPay offer up $Ape for purchase via credit card on day 1. I doubt many consumers are going to be lining up to put a $350K Bored Ape NFT on their Visa, however dropping $500 to dip their toe in the water, that can easily be done after a couple drams of whisky. Chalk this up to a checkmark in the bullish column.
I always feel it is very important to use market cap (MC) rather than price when comparing crypto projects for benchmark purposes. I wrote quite a bit about the basics of MC and why it’s important in my article Wen Moon. In my own analysis on trying to create benchmarks for $Ape, the two projects that came to mind were $Sand, the native token of the Sandbox and $Shib, the popular meme token that has proven to have remarkable staying power.
The company behind the Sandbox is Animoca Brands. They are well funded, well staffed and know what they are doing. Even some world class Football Clubs (yes I call it soccer, but they don’t) Bayern Munich and Manchester City rely on Animoca Brands for their web3 projects. In choosing Animoca to partner with the Apes, we can anticipate BIG things. It has been leaked that a metaverse is coming for the Bored Ape eco system and a land sale is expected sometime in the coming weeks. Last month we saw the financial behemoth JP Morgan make a big bet in the Metaverse which gave us an indication of who what big money thinks of the future of web3. Shortly after the launch of $Ape, Animoca tweeted this:
So, with Animoca on board as a partner, I feel it is a good benchmark to use their other major Metaverse, the Sandbox, as our first litmus test. Metaverse projects in general got their first major market boost last fall when Facebook announced the rebrand to Meta. Following that pump, $Sand’s MC shot up to a high point hovering around $7.5B and then has been bouncing around between $3B-$5B this year with the market turmoil we’ve been experiencing. As I write this, it sits a little over $4B so we will make that our current comparison. Now, with $Ape sitting at a price of $15, it has a MC basically identical to $Sand at $4B. If you believe $Ape’s upside is where $Sand peaked, a $7.5B MC would result in a price of $Ape at $28.
Now let’s look at $Shib. This token followed the meme coin craze started by Doge, and rode it all the way to a high water mark MC of $41B in late October of last year and though its price has been falling, it still holds a MC of $14B. Now let’s be clear, $Shib does not have utility. Its rise and staying power defies logic in a lot of ways. However, $Shib still routinely gets $1B of trading volume a day. $Shib has tapped into retail trading like few projects have been able to. Take a look at its trading pairs, does this chart look familiar?
Shib is a meme that became a bit of a brand. BAYC is a powerhouse brand that is just getting started. If you believe the Ape brand can be as big as the Shib brand, a $40B MC for $Ape is a 10X from where it is now, or $150 $Ape coin. Am I predicting this will happen, NO! Me, nor Crier, nor Elon know what is going to happen next. Well, I guess that is not entirely true, next I am going to make myself a drink because I have been staring at the screen for too long. Maybe a whisky will make me a better predictor of future price, but I digress. The important thing to remember is finding like for like comparisons based on what you think can/will happen. For every $Shib there are thousands of projects that went to zero so only invest with money you can afford to lose.
Let’s review what we do know for sure thus far. Owners of Bored Ape NFTs have proven to be some of the best diamond hands out there. The number of people who invested a few hundred bucks and watched it rise to $350K without selling along the way is pretty incredible. Air-dropping them their first real taste of liquidity could significantly challenge that resolve however. To date, you haven’t easily been able to sell 10% of your Ape NFT, but you can sell 10% of your $Ape coin to treat yourself to a steak dinner or a Corvette. There hasn’t been sell pressure on the coin yet from holders but that is not to say it isn’t coming. Many may be simply holding on until after the land sale before they try to get liquid.
The partnership with Animoca is very bullish for the project overall, but what happens if they can’t launch on time? The Bored Ape community hasn’t faced a lot of adversity since it launched only one year ago. I will say however, it is encouraging to see this early on, how many businesses and platforms have already announced they are going to accept $Ape for payment.
A final word on this, BAYC announced that their merch sale will be using only $Ape for payment. Given the community is now liq’d up I don’t think they will receive any pushback on this idea. To me, the story of $Ape will be written based on 2 things. Can they continue to drive retail investor adoption and how will they handle it when they face their first batch of inevitable adversity? They won’t continue sailing in smooth waters forever, and how they handle the chop will be what I am looking at most. As always DYOR and keep your stick on the ice.