OpenSea valuation falls to $1.4 billion amid NFT-market turmoil

American investment firm Coatue Management reduced its stake in the NFT-marketplace OpenSea by 90% — from $120 million to $13 million. The Information reports, citing internal documents. 

The write-down implies a reduction in the platform’s valuation to $1.4 billion. Coatue also cut its investment in the Web3-payments provider MoonPay by 90%.

In January 2022, OpenSea raised $300 million, at which point its valuation hit a record $13 billion.

However, in September 2023, Dovi Van of Primitive Ventures stated that the metric had fallen to $1.2 billion. According to her, the marketplace team impeded investors trying to exit the project on the over-the-counter market.

Problems for the platform began after August 31 when OpenSea disabled the on-chain tool Operator Filter, which enforces creator fees. The move did not receive the support the team had hoped for.

Billionaire Mark Cuban called the initiative a big mistake. He saw in this move a loss of trust in the marketplace and harm to the industry. Meanwhile, the studio behind the NFT collection BAYC (Bored Ape Yacht Club), Yuga Labs, said it planned to end its collaboration with the platform by February 2024.

In early November, OpenSea announced a 50% staff cut in line with a shift in the marketplace’s development. According to the company’s CEO Devin Finzer, the new strategy envisions a smaller team with closer direct engagement with users.

For October, trading volume on the platform stood at $91.4 million of a total $307.6 million — the lowest since April 2021. In the same month, Blur’s share reached $180.8 million.

OpenSea remains ahead of its nearest rival in sales and active traders, but lags in average NFT price.

State of the NFT market

According to the DappRadar report, Q3 marked a “significant downturn” for the non-fungible token space, recording the lowest trading volume since Q1 2022. Total turnover was $1.39 billion across 11.5 million transactions.

“Although the overall trend may seem disappointing, there were positives in Q3. We witnessed traditional sectors staking their presence in the Web3 space via NFTs. Notably, sales of generative art rose sharply”, analysts said, with a touch of optimism.

As an example they cited 99-year-old artist Vera Molnar, who in June sold 500 NFTs in under an hour for about $1.2 million.

Experts say consumers are gravitating toward NFTs that offer real value, such as membership tokens or other functional benefits.

Despite the overall negative trend, sales of three of the top five collections rose noticeably. However, DappRadar explained this by nearly 40% drop in their minimum price.

In the list remains industry leaders such as BAYC, MAYC, Azuki and CryptoPunks. But September-launched Pudgy Penguins joined them, which analysts called a “defining innovation.” 

After news of OpenSea layoffs, the Blur token jumped 33%. Three weeks earlier, the token had surged 80%.