Exceptional liquidity drives NFT price and value

Blockchain analytics platform Nansen CEO Alex Svanevik believes a “liquidity premium” will drive up the price of the non-fungible token (NFT). This means that liquidity particularly determines the price and value of NFTs, as these tokens “can satisfy more demand” than physical raw materials from the “real world”.

Exceptional liquidity determines the price and value of NFT

Today the Director spoke at a conference hosted by CoinGecko entitled “NFTs Gone Wild” during a panel entitled “NFT Valuation: How to Value NFT”.

Svanevik explains that “one of the reasons” why the NFT became “valuable” so late is that “physical goods cannot be easily traded around the world,” similar to the NFT, where transactions can be completed in seconds – and ownership can be transferred in the blink of an eye.

Kyle Samani, co-founder and managing partner of investment firm Multicoin Capital, agrees. He explains that people can “only show material things” such as cars or designer clothes if they know people with whom they have direct physical contact. But “giving a punk game” (a reference to CryptoPunks, one of the earliest and most popular NFT collections) is an act that “can be expressed for people around the world,” he said.

Samani added that the prevailing belief that online digital goods are inherently “cheaper” than real goods is a “wrong way of thinking” – especially as supermarket projects expand.

Svanevik also argues that the “high purchasing power of participants” drove NFT prices up, arguing that “early winners” in the NFT world could be a positive force in the sector rather than a source of inequality in the digital space .

He explained:

“If the success stories of NFTs and winners reinvest in this area, that could be good.”

And Svanevik concludes that the reality is that due to the decentralized nature of the crypto space, the NFT world “has no gatekeepers, unlike the conventional financial world”. Instead, the spirit of the “system of merit” and those who wish to follow in the footsteps of the NFT pioneers can encourage creativity and value in the field.

What do the experts say about the NFT value?

In assessing the value of NFTs, participants advise investors to consider the “rare characteristics” of an individual token, as well as the size and dynamism of the communities that created or supported them.

However, they agree that while some methods can be used to assess the rarity of NFTs, much of it remains “guesswork” – since the space is still very young.

Meanwhile, Skirmantas Januškas, CEO and co-founder of DappRadar, dismisses the notion that NFT is just a speculative tool for investors looking to get rich quick. He stated:

“We’re getting to the point where it’s not just about filling out a bank account.”

Januškas added that NFTs have demonstrated their possible future value “especially in times of the coronavirus pandemic,” added Januškas – a time when “conventional socialization is difficult” and forms of online communication have become popular.

Svanevik added, “When people talk negatively about NFT, they are talking about: [sự cường điệu xung quanh] Profile photos “, explains:

“NFTs turn anything in the real or digital world into an investable asset.”

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