IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v88y2023icp799-814.html
   My bibliography  Save this article

Don't miss out on NFTs?! A sentiment-based analysis of the early NFT market

Author

Listed:
  • Horky, Florian
  • Dubbick, Lili
  • Rhein, Franziska
  • Fidrmuc, Jarko

Abstract

This study investigates the impact of Twitter sentiment on the Non-Fungible Token (NFT) market. Using a dataset of over 5 million English-language tweets on NFTs, we calculate a daily sentiment index and link it to NFT sales and trading volume. Applying wavelet analysis and DCC-GJR-GARCH models, we analyze the NFT market, characterized by multiple bubbles and high volatility. The findings reveal Twitter's significance as a primary source of information for a broad audience. Moreover, the study contributes to the literature by examining the role of Twitter sentiment in the NFT market's development. Additionally, the study indicates weak links between established cryptocurrencies and the NFT market. Based on our findings, we recommend that traders and policymakers use social media activities to monitor new digital markets.

Suggested Citation

  • Horky, Florian & Dubbick, Lili & Rhein, Franziska & Fidrmuc, Jarko, 2023. "Don't miss out on NFTs?! A sentiment-based analysis of the early NFT market," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 799-814.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:799-814
    DOI: 10.1016/j.iref.2023.07.016
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056023002265
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2023.07.016?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wu, Shan & Tong, Mu & Yang, Zhongyi & Derbali, Abdelkader, 2019. "Does gold or Bitcoin hedge economic policy uncertainty?," Finance Research Letters, Elsevier, vol. 31(C), pages 171-178.
    2. Florian Horky & Mihai Mutascu & Jarko Fidrmuc, 2021. "Pandemic Versus Financial Shocks: Comparison of Two Episodes on the Bitcoin Market," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot GmbH, Berlin, vol. 67(2), pages 113-141.
    3. Chandra, Yanto, 2022. "Non-fungible token-enabled entrepreneurship: A conceptual framework," Journal of Business Venturing Insights, Elsevier, vol. 18(C).
    4. Chalmers, Dominic & Fisch, Christian & Matthews, Russell & Quinn, William & Recker, Jan, 2022. "Beyond the bubble: Will NFTs and digital proof of ownership empower creative industry entrepreneurs?," Journal of Business Venturing Insights, Elsevier, vol. 17(C).
    5. Dowling, Michael, 2022. "Fertile LAND: Pricing non-fungible tokens," Finance Research Letters, Elsevier, vol. 44(C).
    6. Mokni, Khaled & Bouteska, Ahmed & Nakhli, Mohamed Sahbi, 2022. "Investor sentiment and Bitcoin relationship: A quantile-based analysis," The North American Journal of Economics and Finance, Elsevier, vol. 60(C).
    7. Dowling, Michael, 2022. "Is non-fungible token pricing driven by cryptocurrencies?," Finance Research Letters, Elsevier, vol. 44(C).
    8. Yousaf, Imran & Yarovaya, Larisa, 2022. "Herding behavior in conventional cryptocurrency market, non-fungible tokens, and DeFi assets," Finance Research Letters, Elsevier, vol. 50(C).
    9. Aharon, David Y. & Demir, Ender, 2022. "NFTs and asset class spillovers: Lessons from the period around the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 47(PA).
    10. Belk, Russell & Humayun, Mariam & Brouard, Myriam, 2022. "Money, possessions, and ownership in the Metaverse: NFTs, cryptocurrencies, Web3 and Wild Markets," Journal of Business Research, Elsevier, vol. 153(C), pages 198-205.
    11. Kraaijeveld, Olivier & De Smedt, Johannes, 2020. "The predictive power of public Twitter sentiment for forecasting cryptocurrency prices," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 65(C).
    12. Maouchi, Youcef & Charfeddine, Lanouar & El Montasser, Ghassen, 2022. "Understanding digital bubbles amidst the COVID-19 pandemic: Evidence from DeFi and NFTs," Finance Research Letters, Elsevier, vol. 47(PA).
    13. Dyhrberg, Anne Haubo, 2016. "Hedging capabilities of bitcoin. Is it the virtual gold?," Finance Research Letters, Elsevier, vol. 16(C), pages 139-144.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shannon, Darren & Dowling, Michael & Zhaf, Marjan & Sheehan, Barry, 2024. "Dutch auction dynamics in non-fungible token (NFT) markets," Economic Modelling, Elsevier, vol. 141(C).
    2. Yunfei Xing & Justin Z. Zhang & Yuming He & Yueqi Li, 2025. "Toward an ecosystem of non-fungible tokens from mapping public opinions on social media," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 11(1), pages 1-24, December.
    3. Ghosh, Indranil & Alfaro-Cortés, Esteban & Gámez, Matías & García-Rubio, Noelia, 2024. "Reflections of public perception of Russia-Ukraine conflict and Metaverse on the financial outlook of Metaverse coins: Fresh evidence from Reddit sentiment analysis," International Review of Financial Analysis, Elsevier, vol. 93(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Proelss, Juliane & Sévigny, Stéphane & Schweizer, Denis, 2023. "GameFi: The perfect symbiosis of blockchain, tokens, DeFi, and NFTs?," International Review of Financial Analysis, Elsevier, vol. 90(C).
    2. Nobanee, Haitham & Ellili, Nejla Ould Daoud, 2023. "Non-fungible tokens (NFTs): A bibliometric and systematic review, current streams, developments, and directions for future research," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 460-473.
    3. Ali, Shoaib & Umar, Muhammad & Gubareva, Mariya & Vo, Xuan Vinh, 2024. "Extreme connectedness between NFTs and US equity market: A sectoral analysis," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 299-315.
    4. BenMabrouk, Houda & Sassi, Syrine & Soltane, Feriel & Abid, Ilyes, 2024. "Connectedness and portfolio hedging between NFTs segments, American stocks and cryptocurrencies Nexus," International Review of Financial Analysis, Elsevier, vol. 91(C).
    5. Theodore Panagiotidis & Georgios Papapanagiotou, 2024. "A note on the determinants of NFTs returns," Working Paper series 24-07, Rimini Centre for Economic Analysis.
    6. Bejaoui, Azza & Frikha, Wajdi & Jeribi, Ahmed & Bariviera, Aurelio F., 2023. "Connectedness between emerging stock markets, gold, cryptocurrencies, DeFi and NFT: Some new evidence from wavelet analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 619(C).
    7. Choi, Jaeseo, 2024. "A Study on the Applicability of NFT in the Entertainment Industry: Application of the Means-end Chain analysis and Laddering," 24th ITS Biennial Conference, Seoul 2024. New bottles for new wine: digital transformation demands new policies and strategies 302456, International Telecommunications Society (ITS).
    8. Li, Sen & Chen, Yan, 2024. "Governing decentralized autonomous organizations as digital commons," Journal of Business Venturing Insights, Elsevier, vol. 21(C).
    9. Goodell, John W. & Yadav, Miklesh Prasad & Ruan, Junhu & Abedin, Mohammad Zoynul & Malhotra, Nidhi, 2023. "Traditional assets, digital assets and renewable energy: Investigating connectedness during COVID-19 and the Russia-Ukraine war," Finance Research Letters, Elsevier, vol. 58(PA).
    10. Elie Bouri & Matteo Foglia & Sayar Karmakar & Rangan Gupta, 2024. "Return-Volatility Nexus in the Digital Asset Class: A Dynamic Multilayer Connectedness Analysis," Working Papers 202432, University of Pretoria, Department of Economics.
    11. Horky, Florian & Rachel, Carolina & Fidrmuc, Jarko, 2022. "Price determinants of non-fungible tokens in the digital art market," Finance Research Letters, Elsevier, vol. 48(C).
    12. Qiao, Xingzhi & Zhu, Huiming & Tang, Yiding & Peng, Cheng, 2023. "Time-frequency extreme risk spillover network of cryptocurrency coins, DeFi tokens and NFTs," Finance Research Letters, Elsevier, vol. 51(C).
    13. 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).
    14. Foglia, Matteo & Maci, Giampiero & Pacelli, Vincenzo, 2024. "FinTech and fan tokens: Understanding the risks spillover of digital asset investment," Research in International Business and Finance, Elsevier, vol. 68(C).
    15. Fakhfekh, Mohamed & Bejaoui, Azza & Bariviera, Aurelio F. & Jeribi, Ahmed, 2024. "Dependence structure between NFT, DeFi and cryptocurrencies in turbulent times: An Archimax copula approach," The North American Journal of Economics and Finance, Elsevier, vol. 70(C).
    16. Kumar, Sanjeev & Patel, Ritesh & Iqbal, Najaf & Gubareva, Mariya, 2023. "Interconnectivity among cryptocurrencies, NFTs, and DeFi: Evidence from the Russia-Ukraine conflict," The North American Journal of Economics and Finance, Elsevier, vol. 68(C).
    17. Ante, Lennart & Wazinski, Friedrich-Philipp & Saggu, Aman, 2023. "Digital real estate in the metaverse: An empirical analysis of retail investor motivations," Finance Research Letters, Elsevier, vol. 58(PA).
    18. Rami Alkhudary & Bertrand Belvaux & Nathalie Guibert, 2023. "Understanding non-fungible tokens (NFTs): insights on consumption practices and a research agenda," Marketing Letters, Springer, vol. 34(2), pages 321-336, June.
    19. Gunay, Samet & Goodell, John W. & Muhammed, Shahnawaz & Kirimhan, Destan, 2023. "Frequency connectedness between FinTech, NFT and DeFi: Considering linkages to investor sentiment," International Review of Financial Analysis, Elsevier, vol. 90(C).
    20. 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.

    More about this item

    Keywords

    NFTs; Digital finance; Crypto markets; Sentiments; Social media activity;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:799-814. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.