Conclusion

In conclusion, the analysis of the impact of SEC’s investigation of Yuga Labs and its NFT collections has demonstrated that while each one of their NFT collections has benefited from the volatility that this news brought, the Ape Coin was hit hard by the news of the report and its price dramatically dropped since October 11th. Although each collection reacted differently to the news, this event clearly depicted that in shorter time frames, each segment of the cryptocurrency industry, such as NFTs and DeFi in this case, acted separately and while one might go through a downtrend, the other might see an increase in its activity and volumes. This news was followed by the release of CPI data two days later, which similar to the previous months majorly impacted the whole crypto market. While the token prices have continued to further drop down, the sales activity of NFT collections either increased or remained steady during the same period, emphasizing the lack of correlation between different crypto segments.

Introduction

On October 11, Bloomberg reported that the US Securities and Exchange Commission (SEC) has launched a private probe into Yuga Labs Inc., the creator of the popular NFT collections, including Bored Ape Yacht Club and its Mutant version, over whether sales of its digital assets violate federal law. According to the source, the goal of the investigation is to determine if the company’s digital assets, such as NFTs, should be subject to the same disclosure and registration rules as stocks and other securities. ApeCoin (APE) has also been under review. APE is Yuga Labs’s proprietary token which was distributed among the owners of Bored Ape Yacht Club (BAYC) NFTs. There have not been any allegations or accusations of illegal actions by Yuga Labs, and the investigation does not necessarily mean that the SEC will file a lawsuit against the company. Nevertheless, the news itself has brought volatility toward the trading of APE coins and NFTs of collections made by Yuga Labs. In this analysis, the current state of assets created by Yuga Labs has been evaluated in days before and after when the news came out.

ApeCoin Price Action

Methodology

The required data for this analysis were selected from the fact_hourly_token_prices and ez_nft_sales tables of the Core schema of the Ethereum database. The price of the APE coin, as well as its 7-day moving average and its percentage change from the previous data point, were measured and compared to the price of ETH to be able to evaluate the amount of its volatility. According to the Yuga Labs website, six NFT projects have been created by this company. The contract addresses of these collections were selected from their websites and etherscan. All of the volume and price values are in USD.

Sales Overview of NFT Collections

NFT Sales

Daily Sales of NFT Collections

Most Expensive NFTs

Insights

• The price analysis of APE has demonstrated that prior to the news, the price was more or less following the ETH movements with slightly higher volatility. However, as soon as the news came out, the price of ApeCoin drastically dropped;
• Interestingly, Since the 13th of October and the release of CPI data, the price of APE has still followed the price of ETH, and the whole crypto market, yet at lower levels compared to before the SEC news;
• The Ape Coin has been tightly integrated with the Yugaverse, the universe the Yuga Labs is trying to build by utilizing its NFTs. As a result, external factors that heavily affect its NFT ecosystem will also have a huge impact on the price of APE;
• The NFT sales data has indicated that as soon as the SEC news came out, the sales activity massively increased and nearly doubled;
• While the number of sellers increased on the day of the news, expectedly, the number of buyers also increased. However, the rate of increase in the number of buyers was lower compared to the number of sellers, indicating that fewer addresses tended to buy these NFTs;
• Interestingly, the average price of NFTs almost tripled on the 11th of October, despite the uncertainty increase. The holders of these NFTs did not want to sell their assets even in times of high volatility;
• Almost all of the measured metrics for all of the NFT collections increased on October 11 compared to before the news;
• On average, the overall sales activity of Otherdeed has been higher compared to the other collections. However, in terms of volume, the Bored Ape Yacht Club collection massively increased when the news came out and has remained high since then;
• Price-wise, although the CryptoPunks collection registered some incredibly high averages on October 11, it has decreased to price levels below the ones before the mentioned date; It has been the same for all of the other collections as well and their average prices have also decreased to lower levels compared to days before the SEC news;
• While the prices have decreased or stayed relatively the same, the sales activity has increased for all of the collections and they have registered higher sales numbers and volume since the SEC investigation;
• On a daily basis, the top gainer among all of the collections was the Bored Ape Yacht Club collection whose sales volume tripled compared to before the news, and surprisingly, the volatility acted as a catalyzer for its sales;
• Except for CryptoPunks which saw a major increase in its sales when the news came out and immediately fell to its previous levels on the next day, the sales of other collections have stayed relatively the same and the SEC news has not had a drastic impact on them;
• The analysis of the most expensive NFTs sold during the measured period has demonstrated that only one CryptoPunks NFT was responsible for the spike in the collection’s sales charts and acted as an outlier;
• Other than that, the list of NFTs with the highest price has almost been dominated by the BAYC NFTs. However, their price has decreased to their previous averages.