How to Invest in NFT Market? Here are Seven Metrics

NFTs (non-fungible tokens) have been growing at an outstanding rate since late 2020. Understanding macro market data could help investor to get a whole picture of NFT and NFT-related tokens. Therefore, what data and metrics do we need to know to understand NFT market?

Quantitative Framework

Cross-Sectional Data — Time Dimension

In the cross-sectional dimension, there is historical data, recent data and current data, etc. Examples are the historical market trend of NFT within 7D/30D/90D and the latest NFT market performance. It is crucial to know the corresponding data up or down by observing the timeline. In addition, some cumulative data are also worthy of reference, such transaction volume of a single project and total cumulative transaction volume, total holders, etc.

Longitudinal Data — Peer Comparison

The longitudinal dimension is also important for comparison between different NFT projects. In terms of project types, investors need to be aware of the market share of different NFTs, such as trading cards, artwork, collections and metaverse, etc. The volume share of specific NFT projects also deserves attention and some top projects will make up more than half of the total volume. With data, users can easily determine whether the project is currently in the first or second tier. Weekly turnover is also worth cared about, whether it is above $100,000 or above $10,000.

Granular Data — Segmented Metrics

In addition to macro market data, we also need segmented dimensional data to get a more specific understanding of NFT projects.

For example, DAU of the project website, the frequency of searches, the number of traders, the volume of transactions, the number of NFT holders, the activity of the community, etc. All the data above could be found on NFTGO, it has introduced a variety of project metrics for users. For a particular NFT asset, users can also learn about historical transaction prices, buyers or sellers, etc.

With the help of the data above, investors can easily hold, manage and invest in NFT assets. For example, The Bored Ape Yacht Club is a collection of 10000 unique Bored Ape NFTs, and you can check each NFT price fluctuations and changes at any time on NFTGO.

Token Data — Investment Opportunities

When it comes to NFT tokens, it is important to know the market capitalization, trading volume, listing situation, project ecology, community building, potential metrics, returns of the projects, average or maximum increases in different time dimensions. With these information, the easiest way for investors to participate in investing in NFT is to buy potential NFT tokens on major exchanges and track the latest hot projects on NFTGO.

Qualitative Analysis

Besides analyzing NFT data, in what other ways can we judge the investment value of NFT? There are three aspects we can refer to.

Utility

Utility depends on how the NFT is used. The two main types with high utility value are gaming assets and tickets. Another dimension of utility is the ability to use NFTs in different applications. Imagine if you could use the same asset in different games, the value would definitely be higher.

Ownership History

Ownership history is another important metrics. Sometimes the value of an NFT depends on the identity of the creators and previous holders of the NFT. NFTs with high values are usually minted or held by famous artists or companies with influential brands. Currently, you can find the sales history of each NFT on NFTGO, which are also valued as research indicators. In addition, you can also find the address of investors who have earned the most money and see other NFTs they owned at the NFTGO ranking function.

Liquidity

Liquidity is one of the factors that measure whether an NFT has a relatively high value. NFTs with ERC-721 or ERC-1155 standards can easily be traded in the marketplace with anyone holding ETH, which increases the number of potential buyers to some extent. Investors may prefer to invest in the NFT with high liquidity, because liquidity reduces the risk of holding NFT to some extent. In the extreme case, when NFTs lose their utility value after the relevant platform closes, NFTs with high liquidity still have value as long as someone is willing to buy and sell them. On the other hand, NFT standards that are not based on mainstream chain normally lacks of liquidity, and the value of NFTs created on these platforms may be discounted. On NFTGO, users can observe the liquidity of each NFT directly and then make better decisions.

In fact, no one can predict the future of the NFT world with absolute confidence. However, with big data and algorithmic models, we may be able to find some investment opportunities in NFT market.

The gateway to the NFT ecosystem.