FLOOR PRICE NFT- A GUIDE TO UNDERSTAND NFT METRICS

by Rohan

We are going to discuss about what is floor price NFT and enlighten you through the darkness. As NFT craze keeps on increasing day by day, celebrities, YouTubers, gamers take actively part in buying, selling, acquiring even influencing others to join this market. In this growing NFT world, it becomes important to clear certain terms which are linked to NFTs. 

What is an NFT ? 

A NFT or a non-fungible token is basically a unique digital identifier that cannot be copied, subdivided or substituted that is recorded in a blockchain. It is used to certify ownership. Thus, the ownership of any NFT is always recorded in the blockchain and can be used to transfer by the owner which allowing NFTs to be sold or traded. Most people believe NFTs are easy and anybody can create it and it requires few or no coding skills to create. NFTs differ from cryptocurrencies, which are fungible because NFTs are uniquely identifiable assets. The NFT market grew exponentially from 2020–2021: the trading of NFTs in 2021 increased to more than $17 billion, up by 21,000% over 2020’s total of $82 million. NFTs have been exploited as speculative investments, and they have also come under increasing fire and backlash for the energy use and carbon emissions connected with certifying blockchain transactions, as well as for their widespread use in art fraud.

In this article we are going to break down the metrics and make it easy for you which will help you to become a more educated NFT investor. You will get to learn about what is floor price NFT. 

What is Floor Price NFT ? 

Floor price NFT is one of the most interesting topics in the NFT world. The floor price is the least amount of money you have to pay to join a project if you’re interested in participating in the NFT market. The floor price for an NFT is determined by the owner of that NFT in a particular project who is selling it for a lower price than every other seller in that project.

Are you still wondering what is floor price NFT? Then let us explain In this way. In the past, the term “floor price” was frequently used to describe how low a price might be set for a certain commodity, item, or service depending on how many people would be interested in it. It is one of the most often utilised measures for project value in the NFT market. One of the most well-known NFT projects, Bored Ape Yacht Club, now has a price floor of 39.99 Ethereum. This signifies that for 39.99 ETH, purchasers can purchase a Bored Ape. This is the cheapest available option. Sending an offer is one more method a buyer might be able to get a Bored Ape for less than the floor price. However, it is very unlikely that a seller will accept such an offer since it does not make logical sense for them to accept it. Purchasers have the option to send bids or offers which are time sensitive and these offers can be at any price since OpenSea works similar to eBay. Purchasing an NFT at the floor price is often done in order to receive the benefits/utility of being an owner. NFTs that are sold at a floor price or sonewhat near to floor price generally have unique traits or characteristics which are designed by the artist. Those properties are usually not rare and therefore do not create additional value.  In this way, you can analyze which NFT collection has the maximum floor price, comparing one with the other at once. NFT floor price is one of the essential crypto metrics which you could analyze when buying into a collection or project. 

HOW CAN WE JUDGE THE VALUE OF NFT ? 

An NFT becomes valuable only after numerous elements are contributed to it. One of the most important things about NFTs is their rarity/traits that make them unique.  It is because of how visually appealing the Top Dog is. This also illustrates the critical role aesthetics and personal whims play in any art purchase. 

TYPES OF NFT FLOOR PRICE :- 

Now we are going to talk about the different types of floor pricing.

Real-time Value

Depending on the current market value, the floor prices tend to continually change from time to time. Thus, prices are generally updated in real-time in the NFT market where most people base their purchasing and selling decisions. To track NFT collections, the majority of cryptocurrency players use NFT floor price charts.

Decreasing Floor Price

Just remeber that even if a floor price of an NFT project is falling down, there is not always a need to panic or sell your digital assets. It’s not necessarily a bad thing. Actually it is considered quite common. There are various factors that determine an NFT’s value and these factors keep on fluctuating depending on things like new developments in the project, new holders and added utilities. 

Increasing Floor Price

Be careful when making an impulse purchase if you notice an NFT’s price pumping. Sometimes, increasing NFT’s floor price is a good thing for many reasons. Whereas, it can also be an artificial pump for the hype in an attempt to get more people to invest into the project. Proper research is necessary in both the cases, especially when the floor prices show dramatic swings. The reasons remain the same as mentioned in decreasing floor prices including new developments, collaborations with influential personalities, and added utility or promising roadmap. Just make sure whatever is causing the price increase is sustainable and not merely a hype unless you really intend to flip the NFT for a profit straight away.

REASONS BEHIND NFT FLOOR PRICE FLUCTUATIONS

Various reasons for the NFT floor price fluctuations are:

  • Demand for the NFT: If the demand for a certain NFT collection increases, its floor prices also get higher and vice versa.
  • Added Utility or offering: Many NFT projects offer no actual value to holders. And gradually the floor price keeps on declining over time. 
  • The Reputation of the Brand/Creator

We hope we are as excited as we are after having an idea about what is floor price NFT.

ALSO READ :- THE BIG QUESTION : ARE NFTS SECURITIES?

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