Welcome to the latest edition of Bull Case Bear Case. As always, the goal is to give investors a clear, balanced view of both sides of the coin. Prepare to tackle the week with confidence!
Rally
Glowing Eyes Azuki #6704
4/6 @ 12:00 PM ET
Valuation: $32,000
Bull Case
Below the floor. At the time of publication, the Azuki floor sat at28.17 ETH, or more than $94,000. The floor for Azuki’s with Glowing Eyes has surpassed$150,000 and while the floor is only a reflection of asking prices, sales have consistently settled at or above $100,000 through the first five days of April.Rally managed to purchase Azuki #6704 for only $30,434 and the offering carries a microscopic sourcing fee of just $228, or 0.71%. The market cap for the IPO is3.96% higher than the purchase price, which is well below the average cost of fees and expenses for Rally offerings. One comparison to this offering, while not direct, would be when Rally IPO’d CryptoPunk #9670. The Punk was offered inSeptember 2021 for $72,0000. At the time, the floor price for similar Punks has cleared $250,000 and although the maximum share amount was limited at IPO, thePunk is now up 226% on Rally’s secondary market and is their best performingNFT to date.
Monumental levels of momentum. The news cycle surrounding NFT projects moves quickly and has a limited attention span, but at least for the moment, the cycle is entirely focused on Azuki. The project was curated this year, on January 12th, and has already managed to register a seven-figure sale and secure a spot at the top of the NFT market. The project has already been billed by some as the next Bored Ape Yacht Club and with an active community that as engaged in private events in addition to at least one completed airdrop, Azuki NFT’s are following in the footsteps of other successful collections. The Azuki volume reached neared $300 million in its first month and with features in publications such as Forbes plus a growing circle of celebrity holders, the buzz for this project has been as louder, if not louder than any other.
The global reach of anime art. This could be where Azuki separates itself from the field.While it has been difficult to pinpoint the audience that other projects are catering too, Azuki has carved out a niche within the already established anime art market. The global anime market carries a current estimated value of $24billion, with the majority of that (~$20 billion) coming from Japan. There is growing demand across the world though as the United States continues to collect market share and emerging markets including the Philippines, South Korea,France, and Canada have had spikes in anime demand. The anime at market is also seeing more growth and has even extended into the secondary world of traditional art markets. In 2021, Heritage Auctions held their inaugural ‘Art of Anime’ auction and the event exceeded $2.1 million in total sales across more than 1,600 lots.
Bear Case
NFT secondary market performance. The average return for NFTs on Rally is 33.61% across11 traded offerings. That return might not be indicative of the overall market however, as there are only four offerings that are currently trading positively.At the time of writing, three Bored Apes and one CryptoPunk are in the green while the other seven NFTs on Rally are all in the red - some of which are very deep in the red. The first NFTs to trade on Rally have traded positively, for example, Bored Ape #601 has gained 180% since IPO and CryptoPunk #9670 is up296%. On the contrary, the more recently added offerings have been plummeting. There are two Meebits trading on Rally and both are down more than -20% while the CurioCards have fallen -54.33%. Even Punks and Apes are not immune to price drops as the Fedora CryptoPunk is down -54.33% and the Laser Eyes Bored Ape has lost-37.86% of its IPO market cap.
Punks and Apes or bust. That has been the motto for NFTs on fractional platforms to date. On Rally, there are eleven NFTs trading and only four are not Apes or Punks. Although the average return for NFTs on Rally is 33.61%, the average return for non-Ape or Punk NFTs is -33.13%. Each of those four NFTs are currently trading negatively and three of the offerings are down more than -20%.Even with this project, the media has been quick to compare Azuki to the BoredApe Yacht Club and CryptoPunks and with good reason. In a world where the next ‘shiny object’ attracts everyone’s attention and leads to the immediate, yet often unintended, pumping of prices, there have been a plethora of projects which saw spikes in value but then quickly catered less than six months later. There is a limited number of NFTs which have managed to successfully maintain their level of prominence with in the
Too much too soon? The Azuki market is on fire with increasing attention, volume, and prices. Azuki is not the first NFT project to see a massive climb in valuations and it won’t be the last. Only time will tell whether or not this project has the legs to keep its current pace and maintain its placement among the top of the NFT market. Luckily for Rally investors, the platform managed to pick up this Azuki at a steep discount to the current floor price which limits the short-term downside, but where will the floor be when this offerings hits Rally's secondary market? Azuki's have experienced an unprecedented price appreciation over the last 30 days and investors could be buying in on the project now, expected prices to maintain their levels for the next few months.
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