Value Of NFTs – Floor Price VS Transacted Price
How much is that NFT at the window?
NFT valuation is a subjective topic. How much is your NFT worth? Is it fair to estimate its worth by the floor price?
Floor Price Of NFTs
When you browse any projects on NFT marketplaces, one of the most notable figures is the floor price – the price of the cheapest item in a particular collection. That is the price you have to pay to get into the project.
However, floor prices can be misleading because there may be a large number of people who are holding on to the NFTs from this collection, who may not be putting up the items for sale yet, but may do so if there are certain triggers. This is why floor prices can rise very quickly if there are many holders and few sellers, and can also drop very quickly if holders are all in a hurry to sell off their NFTs.
NFT prices can be grossly inflated if the group of holders come to a unanimous decision to not sell the NFT below a certain price. That way, floor prices can shoot to the roof, until it becomes a game of who is willing to let go of it first. Behavioural economics at its finest.
Last Transacted Price Of NFTs
If you are trying to gauge the value of your NFT, a better (still not the best) metric to use could be the Last Transacted Price. This means that there was a seller at that price and the transaction had already happened. Comparatively, even if you were to list your NFT at the floor price, it does not mean that any of the NFTs on the floor can be sold – if there is no demand, the floor will likely go lower.
While floor price is the cheapest price you get to buy into a particular collection, knowing the last transacted price helps because that might be what some of the NFT holders are willing to sell for. Thereafter, you can make a bid around the last transacted price to give a fair offer.
To find out the transacted price and NFTs, click on the Total Sales tab, which should bring up the transaction history for that collection.
What About The True Value Of An NFT?
Should we measure the value of an NFT in ETH or in Dollars? It depends.
Beauty is in the eye of the beholder. NFTs, like art, depends on having someone agreeing with the valuation.
While value is subjective, there can be objective methods to determine whether or not an NFT is worth buying. The best way to do that is to gauge the demand, the supply, and the holding power (or NFT owners).
In this NFT mania, demand is high, but it is relative to the supply, which is also rapidly increasing. The bubble can continue to grow bigger, but likewise, the music can stop, and when it does, 99% of NFT projects will end badly. Caveat emptor, buyers beware.