Tiger Global and Coatue Management Downgrade NFT Investments
Investment firm Tiger Global has taken a significant step back from the NFT and crypto markets as it significantly reduces valuations of holdings in Bored Ape Yacht Club (BAYC) and OpenSea. The sharp markdowns of BAYC by a staggering 69% and OpenSea by a massive 94% reflect the firm’s concerns about the state of the NFT market amidst the broader crypto bear market.
Investments Written Down
The news comes as Tiger Global also revealed writing down its $38 million investment in the cryptocurrency exchange FTX to zero. This move affected investors in the firm’s Private Investment Partners 15 fund, boasting nearly $13 billion in assets, as they faced an 18% paper loss as of September’s end.
Tiger Global’s markdowns don’t stop at BAYC and OpenSea; the firm also devalued its investment in AI-powered email company Superhuman by 45% and in DuckDuckGo, a privacy-focused search engine, by 72%. The severity of these markdowns underlines concerns about the growth and potential profitability of these companies.
NFT Bear Market
The downturn in the NFT space is reflected by BAYC’s price floor, which has seen a 77% decrease from its peak in May 2022. It appears the NFT marketplace is experiencing a harsh reality check as investors reallocate their capital to more secure, potentially less volatile options.
In line with this trend, Coatue Management also reduced the valuation of its OpenSea investment by 90%, adjusting its stake value from $120 million to a mere $13 million. This move demonstrates the cautious approach of venture capital firms as they face uncertainty in the NFT market.
As a result of the broader crypto bear market’s impact on its operations, OpenSea announced a 50% workforce reduction as part of a strategic shift towards OpenSea 2.0. This move reflects the necessity for companies in this space to adapt to the trying market conditions and reassess their strategies moving forward.
In summary, the sweeping markdowns by Tiger Global and Coatue Management highlight the transition of the NFT and crypto markets from hype-driven growth to a more cautious and pragmatic climate. Investors and industry players must now navigate a shifting landscape, bringing with it a new era of sober, strategic decision-making.