{"id":346992,"date":"2021-10-01T16:53:00","date_gmt":"2021-10-01T13:53:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/why-nfts-can-be-a-riskier-investment-than-cryptocurrencies-report\/"},"modified":"2021-10-01T16:53:00","modified_gmt":"2021-10-01T13:53:00","slug":"why-nfts-can-be-a-riskier-investment-than-cryptocurrencies-report","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/why-nfts-can-be-a-riskier-investment-than-cryptocurrencies-report\/","title":{"rendered":"# Why NFTs can be a riskier investment than cryptocurrencies, report"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2535c95e405\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2535c95e405\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/why-nfts-can-be-a-riskier-investment-than-cryptocurrencies-report\/#What_does_liquidity_mean_in_the_context_of_NFTs\" >What does liquidity mean in the context of NFTs?<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Why NFTs can be a riskier investment than cryptocurrencies, report <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-128018ef>Investors who survived the 2008 financial crisis understand the importance of liquidity. When an economic recession starts, deflationary pressure hits the market, and buyers dis<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ear. Sellers frantically try to sell assets before their prices drop further, but buyers want to de-risk and go into safe-haven assets, such as treasury bonds and money market funds.\u00a0<\/p>\n<p>The lack of liquidity associated with nonfungible assets is the one reason why investors may think they are riskier than cryptocurrencies. When an investor wants to sell Bitcoin (BTC), they can easily sell to an order book of buyers at various price points. If a seller doesn\u2019t sell their Bitcoin today, they can easily come back tomorrow and part ways with their Bitcoin in favor of willing buyers. <\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-09\/04c7ccd2-1053-4d03-8e55-0f884cd4283b.png\"><\/figure>\n<p>In contrast, nonfungible tokens (NFT) are unique, and matching sellers with buyers is much more difficult. Cointelegraph Research analyzed what liquidity looked like for NFTs and whether some collections were traded more frequently than others. Cointelegraph Research is releasing its first-ever report on NFTs in October to answer exactly this question and many more surrounding the risks associated with NFTs.\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_does_liquidity_mean_in_the_context_of_NFTs\"><\/span>What does liquidity mean in the context of NFTs? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>There isn\u2019t a market for \u201cMona Lisa\u201d paintings because there is only one \u201cMona Lisa.\u201d Similarly, NFTs have a low level of liquidity compared to fungible currencies. One reason is that collectors often wish to keep their NFTs rather than trade on speculative markets. Another reason is that NFTs are traded bilaterally on marketplaces, with a small pool of potential participants for each sale.<\/p>\n<p>For example, a sports card NFT of a specific player might only be in demand by a subgroup of collectors. Furthermore, not every NFT is a perfect substitution for another NFT. If, for example, Mike wants a 1988 Michael Jordan NFT for his birthday but gets a 2014 Lebron James instead, Mike might not be very happy. Due to the difficulty of comparing different NFTs being offered by sellers and the low number of bids being made by buyers, there is a low number of total transactions. This low turnover makes it more difficult to determine each NFT\u2019s value.<\/p>\n<p>For fungible assets, such as stock shares, liquidity can be measured by dividing the total number of shares traded during a particular period (such as a month) by the average number of shares outstanding for the same period. The higher the share turnover, the more liquid a company\u2019s shares are. But how to go about measuring the liquidity of a unique nonfungible asset? <\/p>\n<p>For markets with low transaction volumes per item, such as real estate or collectibles, the two main types of liquidity measures include \u201ctime on the market\u201d and \u201clevel of transaction activity.\u201d For example, real estate liquidity can be measured by the average time between a home being listed and when it is sold. In NFT terms, this would be the \u201caverage time between when the NFT was listed on a secondary market and when it sold.\u201d <\/p>\n<p><template data-name=\"subscription_form\" data-type=\"consulting_newsletter\"><\/template><\/p>\n<p>According to Gauthier Zuppinger, chief operating officer of NFT data source NonFungible.com, time on the market is difficult to measure for NFTs because \u201cthousands of assets are listed on the market for extremely high prices (some Punks are listed for billions of USD), waiting for the right time or hoping for a whale to buy it. On the other hand, a lot of people don\u2019t \u2018list\u2019 assets but are open to bids.\u201d<\/p>\n<p>The second type of liquidity measure calculates the level of transaction activity. For example, NonFungible.com measures NFT liquidity by the percentage of the total supply of a specific type of asset that has been traded on secondary markets. This can be calculated by dividing the volume of unique assets that have been traded on the secondary market by the total supply available for each type of asset.<\/p>\n<p>So, the answer to the question, \u201cwhich NFT collection is traded the least?\u201d is Meebits. Meebits is one of the least liquid collections, with over 66% not even being sold once. Interestingly, the majority (57.7%) of CryptoPunks have only been sold one time or less. <\/p>\n<p>Launching in October, Cointelegraph Research\u2019s NFT report covers how to value different types of NFTs and how to discover exciting NFT collections before they go mainstream. The report also covers the dark side of NFTs, including their ecological impact and lack of liquidity. The report is supported by projects, including Enjin, OneOf, Nansen, Mintable, Alien Worlds, Animoca Brands, NFT Bank, The Sandbox and Pinata.<\/p>\n<p><em>This article is for information purposes only and represents neither investment advice nor an investment analysis or an invitation to buy or sell financial instruments. Specifically, the document does not serve as a substitute for individual investment or other advice.<\/em><\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/why-nfts-can-be-a-riskier-investment-than-cryptocurrencies-report\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Why NFTs can be a riskier investment than cryptocurrencies, report &#8221; Investors who survived the 2008 financial crisis understand the importance of liquidity. When an economic recession starts, deflationary pressure hits the market, and buyers disappear. Sellers frantically try to sell assets before their prices drop further, but buyers want to de-risk and go&#8230;<\/p>\n","protected":false},"author":1,"featured_media":346993,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDkvYzc2NWJiYTQtZDYxNC00ZWNlLWJkNDUtMmNhZWU3MzNmODA5LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74894,75952,77892,95118,116],"class_list":["post-346992","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-blockchain","tag-cointelegraph-consulting","tag-crypto-collectibles","tag-nft","tag-art"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/346992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=346992"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/346992\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/346993"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=346992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=346992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=346992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}