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The Non-Fungible Token (NFT) Market and Its Relationship with Bitcoin and Ethereum

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  • Lennart Ante

    (Blockchain Research Lab, Max-Brauer-Allee 46, 22765 Hamburg, Germany)

Abstract

Non-fungible tokens (NFTs) are transferrable rights to digital assets, such as art, in-game items, collectables, or music. The phenomenon and its markets have grown significantly since early 2021. We investigate the interrelationships between NFT sales, NFT users (unique active blockchain wallets), and the pricing of Bitcoin (BTC) and Ether (ETH). Using daily data between January 2018 and April 2021, we show that a Bitcoin price shock triggers an increase in NFT sales. Also, Ether price shocks reduce the number of active NFT wallets. The results suggest that (larger) cryptocurrency markets affect the growth and development of the (smaller) NFT market, but there is no reverse effect.

Suggested Citation

  • Lennart Ante, 2022. "The Non-Fungible Token (NFT) Market and Its Relationship with Bitcoin and Ethereum," FinTech, MDPI, vol. 1(3), pages 1-9, June.
    • Handle: RePEc:gam:jfinte:v:1:y:2022:i:3:p:17-224:d:852075
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    References listed on IDEAS

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    Cited by:

    1. Bao, Te & Ma, Mengzhong & Wen, Yonggang, 2023. "Herding in the non-fungible token (NFT) market," Journal of Behavioral and Experimental Finance, Elsevier, vol. 39(C).
    2. Éder Pereira & Paulo Ferreira & Derick Quintino, 2022. "Non-Fungible Tokens (NFTs) and Cryptocurrencies: Efficiency and Comovements," FinTech, MDPI, vol. 1(4), pages 1-8, October.
    3. Boido, Claudio & Aliano, Mauro, 2023. "Digital art and non-fungible-token: Bubble or revolution?," Finance Research Letters, Elsevier, vol. 52(C).
    4. Wang, Jying-Nan & Lee, Yen-Hsien & Liu, Hung-Chun & Hsu, Yuan-Teng, 2023. "Dissecting returns of non-fungible tokens (NFTs): Evidence from CryptoPunks," The North American Journal of Economics and Finance, Elsevier, vol. 65(C).
    5. Andrea Barbon & Angelo Ranaldo, 2023. "NFT Bubbles," Papers 2303.06051, arXiv.org.
    6. Ghosh, Bikramaditya & Bouri, Elie & Wee, Jung Bum & Zulfiqar, Noshaba, 2023. "Return and volatility properties: Stylized facts from the universe of cryptocurrencies and NFTs," Research in International Business and Finance, Elsevier, vol. 65(C).
    7. Oana Marin & Tudor Cioara & Liana Toderean & Dan Mitrea & Ionut Anghel, 2023. "Review of Blockchain Tokens Creation and Valuation," Future Internet, MDPI, vol. 15(12), pages 1-27, November.
    8. Ewelina Plachimowicz & Piotr Wójcik, 2022. "What makes Punks worthy? Valuation of Non-Fungible Tokens based on the CryptoPunks collection using the hedonic pricing method," Working Papers 2022-27, Faculty of Economic Sciences, University of Warsaw.
    9. Wang, Yizhi, 2022. "Volatility spillovers across NFTs news attention and financial markets," International Review of Financial Analysis, Elsevier, vol. 83(C).
    10. Shilov, Kirill (Шилов, Кирилл) & Zubarev, Andrey (Зубарев, Андрей), 2023. "Return factors of Ether cryptocurrency: on chain metrics and DeFi," Working Papers w20220221, Russian Presidential Academy of National Economy and Public Administration.
    11. Jason B. Cho & Sven Serneels & David S. Matteson, 2022. "Non-fungible token transactions: data and challenges," Papers 2210.07393, arXiv.org.
    12. Mingxuan He, 2023. "Deep Learning for Dynamic NFT Valuation," Papers 2312.05346, arXiv.org.
    13. Zhang, Luyao & Sun, Yutong & Quan, Yutong & Cao, Jiaxun & Tong, Xin, 2023. "On the Mechanics of NFT Valuation: AI Ethics and Social Media," OSF Preprints qwpdx, Center for Open Science.
    14. Fridgen, Gilbert & Kräussl, Roman & Papageorgiou, Orestis & Tugnetti, Alessandro, 2023. "The fundamental value of art NFTs," CFS Working Paper Series 709, Center for Financial Studies (CFS).

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