- CryptoPunks study found scarcity and existing crypto holdings made NFTs more valuable, while Ethereum price changes impacted selling but not pricing.
- Study on 1 million wallets showed investors who randomly received valuable NFTs bought more NFTs/crypto later.
- Losses didn’t deter future crypto/NFT ownership as investors stayed optimistic and blamed volatility over poor decisions.
Three recent studies provide insights into what motivates the volatile non-fungible token (NFT) market. Researchers found personal experiences, luck, asset scarcity, and consumer optimism were key factors behind most market movements.
CryptoPunks Study Shows Scarcity and Existing Crypto Holdings Drive Prices
A study by Guneet Kaur Nagpal of Western University and Luc Renneboog of Tilburg University analyzed the market dynamics of CryptoPunks, a popular NFT collection. The researchers found:
- Buyers already invested in Ethereum, the blockchain CryptoPunks uses, paid more for assets and saw higher gains.
- Ethereum price changes influenced the decision to sell/resell but didn’t directly impact NFT prices.
- The creation of rarity for punk types and accessory combinations determined pricing.
Personal Experiences Influence Investor Behavior
University of North Carolina researcher Chuyi Sun examined data from 1 million wallets. Sun found:
- NFT investors who randomly received more valuable NFTs were more likely to buy more NFTs later.
- These investors also tended to buy more speculative cryptocurrencies.
Optimism Drives Continued Crypto Ownership Despite Losses
A study by Akanksha Jalan and Roman Matkovskyy of Rennes School of Business looked at investor optimism. They found:
- Negative past experiences didn’t deter future cryptocurrency/NFT ownership.
- Investors likely attributed losses to market volatility rather than poor decisions.
Conclusion
The research indicates luck, scarcity, optimism and personal experiences are major drivers in the young NFT market. Most investors don’t have enough data yet to make completely rational decisions.
