The values of NFT (non-fungible token) collections, which are shown as works of art of our age, can sometimes be measured in thousands and sometimes millions of dollars. The images we see on the internet can find buyers for over a million dollars. Sometimes these million-dollar NFTs can fall in value. For example, last week, the base price of the popular NFT collection Bored Ape Yacht Club dropped below 30 ETH to a 20-month low.
The fact that Bored Ape Yatch Club, which has been shown as one of the best collections in NFT market places for a long time, experienced such a sharp decrease in the base price, caused some critics to comment that the collection started to fall out of favor.
A popular tweet circulating on Twitter claimed that a Bored Ape NFT, purchased by the famous singer Justin Bieber in January 2022 for $ 1.3 million, fell to a value of approximately $ 59,000. So what affects the value of NFTs? Under what conditions do NFTs increase or decrease in value?
WAYS TO ASSESS NFTS
NFTs are defined as digital properties with clearly defined owners whose source and transactions are stored on a blockchain. Many digital content such as an image, an audio file, a gif, an item from a video game or even a tweet can find buyers in NFT format. NFTs that are unique cannot be copied and reproduced. Since its records are open to everyone, it is easy to learn who owns NFT, its sales history and when it was first published. As a result, it is very easy to identify what is real and what is fake, and thus assign value to the NFT. The market can evaluate an NFT based on how many previous items in the NFT collection have been sold, how long they’ve been produced, the manufacturer’s portfolio of work, and who bought it.
SOCIAL STATUS INDICATOR
Many other factors determine the value of NFT. The first of these is the fluctuation of the Ethereum price. Besides, the community to which NFT belongs is just as important. Many NFTs also function as membership cards for a private community. For example, anyone who owns a piece from the Bored Ape Yacht Club NFT collection can join a special room on the social media platform Discord, receive invitations to various private parties, and even meet celebrities through another platform, Snoop. In short, the NFT you have gives you some privileges. The value of your NFT is closely related to how privileged and powerful your community is.
Besides, NFT also acts as an identity. Just like wearing an expensive watch or a suit, your NFT can be a sign of your social status. Some even say that having NFTs on social media as your profile picture is the same as attending an event with an expensive bag. These NFTs, which reveal our identity and status in the digital world, also have a value that reflects our identity in real life. The owner of an NFT of CryptoPunk, one of the important NFT collections, turned down the $9.5 million offered for his property on the grounds that his NFT more strongly reflected his real-life identity in the virtual world.
IT IS IMPORTANT WHETHER IT IS RARE
Rare features can also add value to an NFT. The rarer a digital property is, the more valuable it can be. For example, according to experts, one of the most valuable pieces of the CryptoPunk collection stands out as the Alien series. Despite the declines, collectors who buy rarer NFTs may be more profitable in the long run, according to Sara Gherghelas, an analyst at analytics data platform DappRadar. “NFTs with certain rarity traits or cultural significance can maintain and even increase their value despite the overall decline of the collection,” says Ghergales. Tools like Deep NFT Value can measure the rarity of an NFT.
In addition, the cultural significance of an NFT and its impact on society can also affect its price. “NFTs associated with influential artists, iconic moments, social or significant cultural events may be of higher value because of their historical or artistic significance,” says Oliver Cohen, president of the NFT analytics data tool Inspect.
Sources: Coindesk, Decrypt
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