Insights from a trio of studies published in November shed light on the social and psychological factors influencing movements in the non-fungible token (NFT) market.
Conducted independently by researchers from Western University in Canada, Tilburg University in the Netherlands, the University of North Carolina at Chapel Hill in the United States, and Rennes School of Business in France, the studies identified personal experiences, luck, asset scarcity, and consumer optimism as key drivers of market activity within the NFT space.
Examining CryptoPunks, a renowned collection of NFT assets, Guneet Kaur Nagpal of Western University and Luc Renneboog of Tilburg University explored market dynamics in their study titled “On Non-fungible Tokens, Blockchain Hypes, and the Creation of Scarcity.” The researchers highlighted notable sales within the CryptoPunks collection, such as CP #5822 fetching USD 23.7 million in February 2022 and CP #7523 obtaining USD 11.8 million in December 2021.
Chuyi Sun, a researcher from the University of North Carolina at Chapel Hill, delved into transaction-level data from approximately one million wallets in a study titled “Personal Experience Effects across Markets: Evidence from NFT and Cryptocurrency Investing.” Sun found that NFT investors who randomly received more valuable NFTs in the primary market were more likely to participate in subsequent primary market sales, leading to increased engagement with “more lottery-like” cryptocurrencies.
In the third study, titled “The Impact of Experience, Overconfidence and Optimism on Future Cryptocurrency Ownership,” conducted by Akanksha Jalan and Roman Matkovskyy of Rennes School of Business, counterintuitive findings emerged. The researchers discovered that negative past experiences, coupled with investor optimism, positively influenced the likelihood of future cryptocurrency and NFT ownership.
These studies contribute valuable insights into the multifaceted nature of NFT market dynamics, highlighting the intersection of personal experiences, luck, scarcity, and optimism as pivotal factors driving transactions and pricing within the burgeoning NFT ecosystem.
