NFT and the crypto market

According to Decrypt’s sources, the list of the aforementioned instruments consists of the following indices.

• The NFT 500 is a kind of analogue of the S&P 500 stock index for the best-known NFT stocks;
• Blue Chip-10 – top 10 NFT-collections by capitalisation;
• Social-100 – ranking of the most popular instances from NFT-collections, which are often used for avatars in social networks;
• Art – ranking of NFT collections related to art;
• Social – ranking of NFT collections related to social platforms;
• Metaverse – ranking of meta-universes.

Correlation between different indices and assets

So, the first conclusion from the study is that the unique token sphere has recently been the most bullish in the entire crypto market, i.e. set for growth. While most crypto projects are in a significant correction, NFT is performing strongly in terms of profitability. It averages 90.9 per cent for the year in Etherium and 35.9 per cent for the year in dollar terms.

At the same time, Bitcoin has fallen in value by around 17 per cent since 1 January and Etherium has depreciated by more than 31 per cent. In other words, while investments in conventional cryptocurrencies at a distance of a few months only bring losses, the average value of NFT tokens from popular collections is steadily increasing.

Bitcoin exchange rate

Another conclusion from studying the NFT-500 index over the past year is that the price of unique tokens in Etherium has an inverse correlation with cryptocurrency prices, that is, it moves in the opposite direction from them. The NFT 500 has a correlation coefficient of -0.46 with Bitcoin and -0.6 with Etherium. Recall that this indicator varies between -1 and 1. The closer it is to -1, the more noticeable the prices of different assets move in directly opposite directions.

However, if the dollar value of unique tokens is taken into account, there is already a positive correlation between them and cryptocurrencies. That is, their prices in dollars often move in the same direction. According to analysts, the reason for this phenomenon lies in volatility.

When NFTs are denominated in US dollars, their returns also vary widely. This is due to the volatility of the ETH/USD exchange rate. Thus, the resulting correlation coefficients also differ. This can be an important factor for investors when deciding whether their portfolio should be denominated in cryptocurrencies or conventional currencies.

Minimum price of tokens in different NFT collections

Data from the Nansen NFT-500 index, denominated in Ethereum, also shows a strong inverse correlation with lesser-known decentralised finance (DeFi) tokens. Thus, when the price of Ethereum-based NFT is high, the dollar prices of DeFi tokens tend to be lower.

On top of all this, analysts have also summarised the absolute returns of different categories of unique tokens. The most prolific category is tokens related to art and social platforms. These NFT categories have a capitalisation of almost $41 billion. Social tokens alone account for $12.8 billion, or about 30 percent of that amount.

Over the past year, the return on unique art-related tokens was 191.8 per cent in ETH and 108.1 per cent in dollars. Over the same period, the Social-100 index yielded 114.8 per cent in ETH and 53.2 per cent in dollars.

In favour of a further increase in the popularity of NFTs are possible scenarios for their use. For example, as a payout in non-exchangeable tokens. This was the case for DJ and musician Dillion Francis, who the day before accepted an NFT token from the Bored Ape Yacht Club (BAYC) collection as a reward for his collaboration with the duo ESCAPΞPLAN. Incidentally, they also formed their digital identity based on BAYC.

Why NFT tokens are needed

Francis’ previously obtained NFT token was sold to Randy Greenstein of Big Night Entertainment for 109 ETH or approximately $283,000 at the current price of the cryptocurrency. The “monkey” was then sent to the musician’s crypto wallet. Big Night itself manages a chain of nightclubs in Boston and works with many artists, including ESCAPΞPLAN.

ESCAPΞPLAN

Dillion Francis has already been interviewed by news outlet Decrypt about his ‘venture’. Here’s his line.

I had to take a “monkey” to take part in filming ESCAPΞPLAN videos.

DJ Dillion Francis

The DJ said he plans to release two songs as a collaboration later this year. Meanwhile, Big Night co-manager Tim Bonito said that the NFT BAYC series could be a good vehicle to fuse Web 3 and the music industry.

We didn’t want to immediately promote Web 3 in questionable ways. I think a lot of people will discover the song ESCAPΞPLAN without even realising that it is made in the name of “monkeys”. Then they will rediscover those NFTs in a new way.

Francis’ NFT token

There is also the possibility that Francis and ESCAPΞPLAN will work with other BAYC-owned musicians on future tracks. The DJ himself noted his interest in the crypto industry, which started back in 2017 – he’s now actively collecting other NFTs and just buying crypto.


We believe that NFT tokens cannot be a reliable store of value for investors, as their value is highly dependent on what is happening in the cryptocurrency market. In other words, when coin rates fall, few people are interested in investing in any NFT. Naturally, the most popular tokens will always be priced, but they also have a corresponding price tag. Therefore, most crypto enthusiasts are unlikely to take a risk with such investments - at least in a bear market.


SUBSCRIBE TO OUR CHANNEL ON TELEGRAM. THERE’S MORE INTERESTING NEWS HERE.