Recurring market commentary on what's happening in the crypto markets, summarized by the Crypto Broker team at Crypto Finance AG.

Market commentary

Good Morning!

I missed the first train… Let’s see if another one leaves the station at some point…

I am talking about NFTs. I completely missed the train due to my lack of understanding and probably also my stubbornness. Now, I am trying to find my way into this sector, and hopefully my short overview will be of value in order to get a glimpse of this still very small market niche.

Growing number of NFT sales | Source: NonFungible

What makes an NFT valuable?

First of all, what makes an NFT valuable?
I think it is three closely connected things:

Scarcity
Provenance
Who the other owners are

Obviously, the biggest drivers are the market participants, who decide how much they want to pay to get, e.g. a JPEG with an ape wearing sunglasses… That’s just how open markets work.

NFT Marketplaces

The NFT marketplaces are probably as fragmented as the early trading ecosystem for bitcoin was in 2015. I began by screening Twitter to find some people to follow, and after 1-2 weeks I had a few sources I could check regularly to get a feel for the market moves and the new projects that were popping up like popcorn.

Trading/listing/price info platforms:

If you want to read a comprehensive report about the space, I found an article from Messari very helpful.

Ethereum the leading platform

Ethereum is still the leading platform where most of the NFT action is happening. But, e.g. solanart just launched over the weekend, and is offering different types of NFTs on the Solana network (SOL). As a little side note, I tried to buy an ape on the weekend on solanart.io, but there was no chance to get my hands on one. The website was overloaded most of the time and when I was in, I was too greedy to pay the ask price. When I gave up on Sunday night, the floor was 10 SOL. The floor is now 100 SOL!

It takes a couple of hours to gain some basic knowledge, but I think that once you have learned the basics and found the right tools to monitor the market, you will have some fun trading it. The good thing is that there are no marketplaces to trade with leverage, so your downside is limited (little sidejoke).

One thing that gets me thinking, though, is the potential dilution you get when the same type of NFTs are launched on a different network. For example, on the solanart.io, we have the series “SolPunks”, which look pretty much like Crypto Punks. I believe that provenance and who the owners are of similar “punks” will make the difference in terms of price. The network probably does not play a massive role (except, of course, if you have reason to believe that one of the networks will not exist anymore in a few years).

Have fun “apeing” into the NFT space!

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