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Bored Ape Yacht Club (BAYC): Is it worth investing in?

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In the meantime, word has probably got around that very few NFTs are really serious art or art projects. This becomes particularly clear when you look at the currently most expensive and hippest NFT collection: the Bored Apes. What is art or not is of course in the eye of the beholder. If you like, you can hang a digital monkey picture in an NFT picture frame on the wall at home. However, it would be wrong to believe that this circumstance justifies prices in the millions.

The Bored Ape Yacht Club (BAYC) edition, which includes 10,000 monkey pictures, hit a new record sale a few days ago. The Bored Ape with the number #232 went over the virtual counter for the equivalent of 2.85 million US dollars. But why does someone pay so much money for a digital monkey picture?

Being there is everything – welcome to the celebrities

Celebrities like Justin Bieber, Eminem or tennis pro Serena Williams are united: They all own Bored Ape NFTs and are therefore prominent members of the BAYC. They, too, paid quite a bit for this membership. For example, Justin Bieber shelled out $1.3 million for his digital monkey. Though not quite that much, Eminem still spent $461,000 on his Bored Ape NFT.

The principle behind this elite club is simple: you’re among yourself and whoever’s in it belongs. Elite circles and member clubs are raised to the digital level by NFTs. Just as you can become a member of Soho House or secure a membership at the exclusive Liberty National Golf Club in New Jersey for around half a million US dollars, closed places are now also being created in the purely digital world. If you no longer know which luxury watch or yacht you should buy next, Membership NFTs give you a new opportunity to show off your own prestige.

Growth sector digital NFT communities

In various differentiations, strong growth of digital clubs can be expected in the future. The expected market growth promises to become an attractive playing field for adventurers and investors through NFTs and social tokens. Especially with regard to the metaverse, there are no limits to the imagination. The catch is that nobody currently knows which communities will prevail in the next few years. Everything is still new and chaotic, as is usual at the beginning of a discovery phase.

Like the hippest bars, restaurants or clubs in the big city metropolises, it is primarily trends that determine the value of a membership, ergo NFT. Today it may be the BAYC, but tomorrow the stars may already have arrived at a new club. Those who then still have the membership NFTs from the club that is suddenly out have to reckon with a massive price slump.

Is it still worth joining the Bored Ape Yacht Club?

Anyone who thinks that celebrities and the super-rich will still be meeting at the Bored Ape Yacht Club in ten years’ time can be lucky that one of the cheaper examples, currently around 200,000 US dollars, will then be worth more. Especially since the prices of the 10,000 Bored Ape NFTs in total are likely to converge more and more over time. After all, the membership aspect dominates and less the individualistic art aspect. Also, keep in mind that NFTs owned by celebrities are likely to have a higher resale value than those owned by unknown individuals.

In view of the fast pace of the crypto sector, one may now ask how likely such an establishment of the BAYC is. The assumption that there is a bubble in this specific case should certainly appear plausible. The company behind BAYC, Yuga Labs, is already valued at over $5 billion. Assuming an average selling price of a Bored Ape NFT of $200,000 – most offers at Open Sea are significantly higher – then you would arrive at a collection value of $2 billion.

For a digital club with no history or track record, that’s quite a sporty sum. Accordingly, Yuga Labs immediately opened a second club, the Mutant Ape Yacht Club (MAYC).

NFT Investment Clubs: The Perfect House of Cards

The price bubble is also fueled by NFT investment clubs and NFT-based DAOs. Projects such as HeadDAO issue colorful member club NFTs themselves in order to use this capital to acquire other NFTs. In this way, NFT investment funds can be created, among other things, in which Bored Apes, Crypto Punks and Co. then find their place in the portfolio. One can hardly speak of serious diversification with such NFT funds.

An increase in demand for NFT funds, similar to what is seen in ETF stock funds, can fuel the overvaluation even further. If, on the other hand, there is a bang because a project like BAYC is reaching its zenith and triggering a wave of sales in comparable projects, such NFT funds can only intensify the fall in prices.

Is the NFT sector in a bubble?

However, it would be wrong to conclude that the entire NFT sector is in a bubble. Anything and everything can be an NFT. Is it about art? gaming? Music? member clubs? DAO’s? And so on. Each NFT area is to be evaluated differently.

Especially in the traditional art field, there are very down-to-earth NFT projects where one cannot speak of exaggeration. For example, the famous artist Damien Hirst recently created a new one version also issued as an NFT, which in turn embodies the claim to receive a print version of the limited edition. Cost: $3,500.

It is therefore always important to question what the “underlying” of the NFT is and what benefits can be derived from it. In the case of a member’s club, this can include benefits and special contacts, while in the case of artists it can be original prints or a personal meeting with the idol beckons in the case of a music NFT. The fundamental value of an NFT can therefore be composed in a highly individual manner. Accordingly, one can also come to the conclusion that an NFT million amount is excessive for the BAYC, which so far has not offered any significant added value apart from prestige.

Everyone will have an NFT membership

As critical as one may view the current development, such community constructs offer a remarkable form of new digital value creation and participation. As with all innovations, however, there are also exaggerations. Bubbles are an integral part of an establishment process.

The club system, which is outdated in parts, as it is known in Germany in particular, is given a digital counterpart by NFT member clubs. Digitization is also changing our social interaction and NFTs are an instrument for controlling this in digital worlds. In a few years most people will have some form of NFT-based membership. And if it’s just about redeeming Payback points for weekly shopping in the supermarket.

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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