ApeCoin (APE): brief hype or game changer?

Anyone talking about NFT cannot avoid the hype surrounding the Bored Ape Yacht Club (BAYC). In addition to the overpriced NFT monkey images that promise access to an exclusive club, Metaverse ambitions have now attracted new attention. To fund the Metaverse project, the company behind Monkey Universe, Yuga Labs, completed the sale of the Metaverse properties. For the virgin building plot in the so-called Other side the company was able to raise US$320 million last weekend.

The cryptocurrency ApeCoin (APE), which belongs to the primate ecosystem, reacted accordingly in a volatile way. Should mean: before the NFT selloff, the price of the cryptocurrency rose hugely, hit an all-time high of over US$27, then crashed again after the auction. ApeCoin is now trading at around $16.

No one really cares about metaverse properties

Professional speculators were able to make clever use of the fashionable sale. The sale of the 55,000 lots for around $5,800 each in ApeCoin generated huge demand for APE coins, which drove the price up. After the NFT auction, the big sale started in the OpenSea market.

After all, very few real estate buyers were seriously interested in it. Instead of developing the virtual properties further, they wanted to flip them, so try to cash in quickly so the APE price could correct to the south. If you look at the other NFT properties, you can see the average price has really dropped. From an average of 8.3 ether on May 1 to 3.6 ether on May 5.

Yuga Labs’ record NFT sale showed once again that it is currently all about speculation and less about relying on a substantial project with a long-term time horizon. In the end, those who didn’t jump in time or only stocked up on ApeCoin shortly before the auction lost.

Alarm bells should ring regarding additional purchase costs

Anyone who buys an apartment, for example, has to pay additional costs such as registration in the land register or brokerage fees in addition to the purchase price. Depending on federal state and other factors, this can easily amount to as much as 10%. In the case of properties in the primate metaverse, on the other hand, the additional purchase costs sometimes amounted to more than half of the purchase price.

The $320 million raised resulted in over $180 million in transaction costs on the Ethereum blockchain. This leads to the conclusion that NFT speculators expected their land prices to increase by more than 50% immediately, otherwise their investment would be negative. No matter how you calculate it, the whole investment case only works if you rely on a Ver-X folding.

At the same time, ancillary fees show the brutal inefficiency of the blockchain industry. Having to pay two to five ETH for a single transaction is just absurd. No wonder some NFT investors have fallen victim to phishing attacks. Fraudsters have announced that excessive transaction fees will be refunded if you connect your wallet to the corresponding service. The result was often empty wallets and damages running into the millions.

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Hard blow for the Ethereum blockchain

Yuga Laboratories excuse advocated the paralysis of the Ethereum blockchain on Twitter and called on the Decentralized Autonomous Organization (DAO) behind it to force a change to another blockchain. After all, ApeCoin does not yet have its own blockchain, so transactions run on the Ethereum blockchain.

The incident shows that the Ethereum blockchain is not as advanced as many crypto enthusiasts had hoped. The lack of scalability and the fact that the hypes quickly become overwhelming prove that there is still a long way to go for the mainstream commercial establishment.

ApeCoin: praise in droves

Lots of praise in advance and no noteworthy results. This is what you might call the Yuga Labs Monkey Ecosystem. In a very short time, the company has become a unicorn with over half a billion dollars worth of firepower.

The danger that high expectations will now be disappointed is enormous. To be fair, this also applies to other Metaverse and DAO projects. Even the metaverse sandbox has yet to prove that the multi-billion worth of NFT assets can last over time.

Due to the fact that new innovations continue to appear – the best example is the Bored Ape Yacht Club’s current Metaverse – work is being actively carried out to prevent a price correction. One could say cynically that a new, even bigger air castle is placed on top of an existing air castle.

Otherside, Bored Ape Yacht Club and ApeCoin: Will it all be okay in the end?

If the Bored Ape Yacht Club and the Otherside Metaverse manage to create an active community that does more than speculate, but also spends time effectively in the Metaverse, then NFT betting could take off. Finally, the monkey ecosystem has a first-mover advantage and is at the forefront as a blue chip asset, at least in terms of size. Investment funds – specifically designed as DAOs – could provide long-term cash inflows for NFTs. Pars pro toto, this is not necessarily the end of a still very young market given the current valuation levels.

Detached from NFT valuations, ApeCoin in particular could benefit the most. This offers the easiest access to said ecosystem and can be purchased through various exchanges. Just like a portfolio addition, true to the motto: “be there”, new ApeCoin investors are likely to be added despite the correction of the past few days.

ApeCoin is one of the risky candidates among the top 50 coins (currently ranked 30th by market capitalization). On the other hand, ApeCoin should be sure of a great emotional bond among small investors. A sharp increase in its level of awareness can also be expected outside the crypto sector. Despite all the doubts and question marks raised by the project, this marketing aspect should not be underestimated.

Disclaimer: The article reflects the personal opinion of the author only and does not represent any kind of recommendation to buy or sell.