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OpenSea Investor Slashes Valuation by 90% — NFT Market Primed for Comeback

Last Updated November 8, 2023 11:32 AM
James Morales
Last Updated November 8, 2023 11:32 AM

Key Takeaways

  • OpenSea investor Coatue has marked down the value of its stake in the company.
  • A long NFT winter has seen the platform’s valuation plummet by 90%.
  • But after cryptocurrency markets rallied in October, NFT prices could soon follow.

Following a boom in 2021, since mid-2022, the NFT market has struggled to regain its mojo. For the Opensea marketplace, a prolonged NFT winter has seen its bottom line hurt by depressed floor prices and low trade volumes.

As a sign of its declining business prospects, one of OpenSea’s largest investors has now marked down the value of its share in the company by 90%. But could an NFT renaissance be about to turn the platform’s fortunes around?

Coatue Writes Down Opensea Investment

In January 2022, the venture capital investors Coatue and Paradigm led a $300M Series C funding round that valued OpenSea at $13.3B.

At the time, the arrival of respected technology investors appeared to signal the sector’s coming of age after NFTs exploded into the public consciousness in 2021.

Nearly two years later, however, Coatue has reportedly  marked down the value of its stake in OpenSea from $120M to $13M, a significant devaluation that reflects a broader loss of confidence in the NFT market.

Certainly, the past 18 months have been painful for the sector. As the NFT bubble burst, by July 2023, an estimated 95%  of all collections had tanked to zero, leaving 23 million people with worthless investments.

“NFTs are dead and buried,” ran one typical headline . But were the technology’s detractors too eager to pronounce its death? In recent weeks, rising cryptocurrency prices have injected renewed optimism into the NFT market, which is once again showing signs of life.

Crypto Price Cycles And The NFT Lag

Because they exist as virtual assets recorded on Ethereum or another blockchain, for as long as people have bought and sold NFTs, cryptocurrency prices have had a significant influence on trading activity.

Given this fundamental alignment, NFT price cycles have historically followed the peaks and troughs of the crypto market, only with a delay of several months.

NFT total market capitalization
  NFT market cap and trading volume during the past 3 months.

For example, although the total crypto market capitalization peaked at over US$3 trillion in November 2021, it wasn’t until January 2022 that the NFT market found its top. Likewise, whereas the overall crypto market bottomed out in December 2022, NFT prices only turned around in October.

Now, with the combined market cap of all cryptocurrencies up over 20% in the past month, bullish predictions are anticipating further gains. 

If the rally continues, NFT prices could follow suit. With blue-chip NFTs currently selling for well below their value during the previous market peak, now might be the opportune moment for speculative investors looking to snap up a bargain.

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