How does the price of NFTs increase?
How does the price of NFTs increase and what determines their value over time? A Descriptive Guide to the Non-Fungible Token Market.
The price of NFTs over time: between coin price and resale price
The Non-Fungible Token market peaked in 2021, when many referred to it as a “bubble”, which was again at 9 billion dollars total NFT sales at the time of writing.
Staggering figures can raise questions about how such a market works. And indeed, to understand the performance of NFTs, one must analyze what their price and value over time is based on.
Among the various market factors that determine the price and value of an NFT are mint price and resale price.
First of all, NFTs are tokens imprinted on blockchains such as Ethereum, Polygon and Solana, where the first creators of NFTs met differently coin fees based on the blockchain they used and also based on the value of the reference cryptocurrencywhich is well known to fluctuate over time.
Not only that, but once an NFT has been minted and sold for the first time, it can be resold on a marketplace at a price determined by the seller. The current seller’s first price is called minimum price (or floor price).
Most NFT marketplaces display the floor price so you know the minimum investment to enter that collection.
How the price of NFTs increases: the law of the market.
Just as the law of the market teaches, for NFTs, the increase in price comes from the increase in market demand and the decrease in supply.
In practice, NFTs gain value when buyers can sell their NFTs at a higher price than they paid.
Not only that, just like with cryptocurrencies, a pool of non-fungible tokens increases in value as market demand increases and the total supply of NFTs available for sale is reduced.
To give an example, the famous Bored Ape Yacht Club (BAYC) gatheringwhen they were first extracted, they sold for not even 1 ETH, compared to the current floor price of over 83 ETH on OpenSea.
There is an increase/decrease in value and price of NFTs precisely because there is a market for them, namely a buyer who is willing to pay a higher/lower price for the NFT in question. Put another way: an NFT is worth what a buyer is willing to pay for it.
DappRadar’s NFT market statistics
By following aggregate statistics on DappRadarcan we get others valuable data to understand the price and value of NFT or NFT collection we are interested in.
First, DappRadar presents a list of blockchains most commonly used to develop NFTs beyond the three mentioned above, such as WAX, BNB Chain, Flow, Tron, Tezos, Avalanche, Zilliqa and many others.
Not only that, by selecting filters you can also find out which ones are currently on top 3 collections in terms of market value, trading volume, number of dealers and number of sales:
- Axie Infinity on Ethereum and Ronin;
- CryptoPunks on Ethereum;
- BAYC on Ethereum.
You can do the same by filtering the marketplaces and find it OpenSea, Axie Marketplace and CryptoPunks are the top 3 NFTs marketplaces by trading volume and number of traders.
The hype about non-fungible tokens
Another not insignificant indicator is the hype created around a particular NFTcreates added value based on increased interest which can then justify raising the price.
Some hype can be considered speculation games, while others is based on real unique digital works without going into it further.
For example, when it was launched, Logan Paul’s collection of NFTs attracted so much interest that it sold NFTs worth $1 million in 30 minutes and $3.4 million on the first day.
The project was soon accused of copying Adobe’s stock images and has been the subject of controversy ever since.
Other striking events in this niche market have been the sale of digital works of art, for example rrecord sale for $69 million of NFT coin by the artist Beeple.
In this regard, just this week, the global auction house Christie’swho hosted the record sale, launched its Christie’s 3.0 platform specifically to devote itself entirely to NFT sales.
