Leverage is a double-edged sword. Many NFT folks don’t come from a finance background and their first introduction to crypto is through NFTs. And there was hardly any leverage in the previous NFT bull run.

So they are just beginning to understand that leverage works both ways: it can pump prices to infinity, or bring it back down to earth sharply.

This was the worst liquidation cascade for NFTs, ever: 1200+ loans were liquidated over 4 days, mostly on Blend.

We’ve seen a bit of a bounce for NFTs over the past day, now that a good part of the leverage has cleared.

The question is on our minds: Is this merely a dead cat bounce, or the beginning of a slow yet more sustainable recovery?