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NFT Bubbles

Author

Listed:
  • Andrea Barbon

    (University of St. Gallen; Swiss Finance Institute)

  • Angelo Ranaldo

    (University of St. Gallen; Swiss Finance Institute)

Abstract

By investigating nonfungible tokens (NFTs), we provide the first systematic study of retail investor behavior through asset bubbles. Given that NFTs are recorded in public blockchains, we are able to track investor behavior over time, leading to the identification of numerous price run-ups and crashes. Our study reveals that agent-level variables, such as investor sophistication, heterogeneity, and wash trading, in addition to aggregate variables, such as volatility, price acceleration, and turnover, significantly predict bubble formation and price crashes. We find that sophisticated investors consistently outperform others and exhibit characteristics consistent with superior information and skills, supporting the narrative surrounding asset pricing bubbles.

Suggested Citation

  • Andrea Barbon & Angelo Ranaldo, 2023. "NFT Bubbles," Swiss Finance Institute Research Paper Series 23-20, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2320
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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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