The fundamental value of Art NFTs

  • Art-related non-fungible tokens (NFTs) took the digital art space by storm in 2021, generating massive amounts of volume and attracting a large number of users to a previously obscure part of blockchain technology. Still, very little is known about the attributes that influence the price of these digital assets. This paper attempts to evaluate the level of speculation associated with art NFTs, comprehend the characteristics that confer value on them and design a profitable trading strategy based on our findings. We analyze 860,067 art NFTs that have been deployed on the Ethereum blockchain and have been involved in 317,950 sales using machine learning methods to forecast the probability of sale, the trade frequency and the average price. We find that NFTs are highly speculative assets and that their price and recurrence of sale are heavily determined by the floor and the last sale prices, independent of any fundamental value.

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Author:Gilbert FridgenORCiDGND, Roman KräusslORCiDGND, Orestis PapageorgiouORCiD, Alessandro Tugnetti
Series (Serial Number):CFS working paper series (No. 709)
Publisher:Center for Financial Studies
Place of publication:Frankfurt, M.
Document Type:Working Paper
Year of Completion:2023
Year of first Publication:2023
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2023/03/16
Tag:Blockchain; Ethereum; Fundamental Value; Machine Learning; Non-fungible tokens (NFTs); Speculation
Edition:February 3, 2023
Page Number:46
JEL-Klassifikation: C55 Large Data Sets: Modeling and Analysis
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
JEL-Classification:G Financial Economics / G1 General Financial Markets / G11 Portfolio Choice; Investment Decisions
Z Other Special Topics / Z1 Cultural Economics; Economic Sociology; Economic Anthropology / Z11 Economics of the Arts and Literature
Licence (German):License LogoDeutsches Urheberrecht