NFT is the talk of the town, and we are here to let you know what’s going on. In this article, we will be talking about the concept of a floor price NFT, which means the minimum price you need to pay if you want to become an investor in the NFT market.
But, as most things are, the concept is much more complicated than that simple introduction, like most things in the NFT space. Thus, will also speak about the concept of an NFT, the floor price calculated by the pros, and an average item price.
Feeling like there is something to find out about this topic that you may have missed? Check this out with our help! NFT floor pricing – here we come!
What Is an NFT?
But first – a little introduction to the beautiful world of NFTs. We have decided to keep adding those introductions, as people are still slightly confused about what exactly an NFT is. So, let’s start with the acronym itself. NFT stands for non-fungible token. What it means is that you cannot exchange your NFT for another NFT. You can sell it, buy it, or do whatever you want, but you can’t trade it for a different NFT.
What we mean by that is that every single NFT is unique. You wouldn’t take a Pokemon card and trade it for a plant and a bunch of screws, would you? Well, you could, but it would depend on the agreement between you and the person with plants and screws rather than it being an industry standard.
So, what can become a part of Non-Fungible Tokens family? Well, literally any single piece of digital assets that you would want to make an NFT out of. Audio, video, pictures, whatever can be transferred within the digital world, you can create an NFT out of. Even more, it can be a combination of different elements, clips, or any piece of media you would like.
Why is it useful? Well, for years, people have been trying to identify the owner of the digital file. You could patent it and maybe claim ownership of it based on the different intellectual property laws, but no one stopped others from just copying it and saying it was theirs. Without a tough legal battle, you could not prove it.
Well, with the introduction of NFTs, it is much simpler. As they reside on the blockchain, you can just point out the token of ownership and present it to anyone who says otherwise. Of course, this is all based on the NFT metrics. Still, because there are millions of dollars invested in this space, you can probably trust it a little bit.
This article is a segment of a more extensive piece. Read more about What Is NFT.
What Are NFT Floor Prices?
So, let’s talk briefly about the topic at hand – floor price. It is the lowest-priced NFT you can find to join the NFT market. That would be the NFT in the project listed even a cent below all the others in the collection.
The first estimate is based on the mint price, as the original creator usually sets it and cannot be changed. But, after getting to the secondary markets, the price can go up or down depending on the hype and marketing efforts from the creator or their company.
There are many ways to go about it. For example, some creators decide to make a higher floor price in the secondary market because they want to get more money for their work. On the other hand, some NFT companies want to get some liquidity, maybe promote the concept, and get the prices down to accomplish some other goal, like in the case of Ethereum and minting NFTs. There are many reasons why the NFT project’s floor price decreases, and many reasons why it may increase.
You need to remember that if you price cheaper, it does not mean that you don’t believe in the project or that it’s worse than other parts of the collection. The best way to find out the real value of a piece is to see the NFT floor price chart, where all the prices in the group are listed.
How to Understand the Floor Price of an NFT?
So, where should you look at the floor price of the NFT? Well, there are a couple of things that can certainly lead you to some knowledge in the matter.
For starters, you need to find out the collection you are interested in investing in. As everything on the blockchain is public, you will quickly be able to find out something you may be interested in. Then, look for the lowest price of any item in the collection. That would be your floor price. Of course, it may be one of many types of floor prices, and that is why we need to talk a little bit about them.
NFT Floor Price Types
So, now that you know what an NFT is and what it means to search for a floor price, let’s find out about different types of floor prices. It is of essence to understand those concepts, as they can often change the outcome of many conversations, from what should you do to avoid paying the higher price, what to invest in, and which price is the lowest.
Let’s find out all about the above, shall we?
Real-Time
The first thing on our list is something pretty self-explanatory. Your real-time price. Real-time value of an NFT is the price at a specific moment in the particular NFT collection. You will probably not be able to do it on your own, as checking every five minutes to see if anything has changed regarding the item in the NFT collection you are observing may be a bit too tedious of a job. For a human, of course.
Fortunately, there are plenty of algorithms that can help you out with tracking the price floor of a certain NFT collection. If it is something you may be interested in, check out those websites. They can make your life easier if you want to invest.
Increasing
Next up, we have the increasing floor price. This one is exciting. When you see a floor price increase, be aware of your NFT collections. Sometimes it may mean that you are getting a run for your money. You may be the next crypto billionaire as your 0.0000001 ETH picture of a mouse doubled in value.
But those elements can be misleading. You don’t know what is going on behind closed doors, as it may be caused by a few things you couldn’t foresee. All your buying and selling decisions should be based on a multi-layered analysis, not a one-factor understanding.
For example – maybe the creators are buying NFTs to spike the prices and get the hype train running. Perhaps they are collecting capital by removing some parts of the collection from the market to focus on something else.
There are plenty of reasons why it would happen, so be sure not to jump in the wagon and purchase/sell immediately. You may have heard about some investors selling or buying on a hunch, but those are infrequent stories, and most are fabricated.
Decreasing
Next up, we have the decreasing floor price, AKA – I am panicking and selling all my assets as it may not be an optimal solution. As we’ve explained in the increasing part of our article, NFT’s price pumping/dumping is not a new occurrence. It may be linked to many reasons, and some of them mean you will lose all your money.
There can be many reasons why the specific collection is dropping in price, and only one means – NFT holders sell your assets. And it’s a total crash, basically.. The most common explanation is that – it’s normal. If you can’t see giant swings in the company you are investing in, and there are no issues with the collection owners that may lead them to jail, then you are probably ok.
You can inspect if the increase/decrease levels are in the margin by watching the market and noting what is happening. Of course, there are some issues that you cannot see, and sometimes it’s good to be cautious. Still, if you are over-sensitive in this matter, you will lose money this way rather than investing in a potential new hot topic.
NFT Floor Price Calculated
So, why the floor price of the NFT may be changing? Well, every NFT project has its NFT floor price fluctuations. Whether it’s a matter of the NFT rarity or the fact that the digital asset was price pumped by the bad actors or plenty of other things, there are some ways of finding that out. Here are some of the most common elements that may influence the pricing structure of any NFT collection.
Supply/Demand
First up, we have our supply/demand correlation. It’s a pretty common thing, so we will not get into too much detail, so let’s focus on the example.
Let’s use the grocery store example. There are a lot of cornflakes out there that people want to buy, so the price is relatively low. But the more people would buy it, the higher the price will get, as the company would simply think – people are going to buy it anyways, and even if we lose some customers, we will gain more money by increasing the prices.
On the other hand, there is not a lot of champagne in the market, but there is some demand for it, so the prices stay high. If no one wanted to buy champagne, the company would have to lower the costs to satisfy the manufacturing side of the business.
Hype
The next thing that can increase the future price of an NFT is hype. Well, in most cases, it’s hype. The more considerable hype, the higher NFT floor prices. On the other hand, it’s probably the same thing with all the different goods. If there is hype for a particular game, it may be 100% worse than its competitor, but people would buy it anyway.
To gauge the hype of a specific NFT collection, you should seek information on how the NFT is being marketed and how many people mention it on their social media.
Working with Famous Artists
And finally, working with big influencers can make your 1 dollar investment sky-rocket into a 1 million dollar investment. Just think about it like the person in the picture, Mr. Beeple, who sold his works for hundreds of millions of dollars. Just mentioning his name in the project will significantly increase the whole collection’s value.
So, be sure to collaborate with other famous NFT creators if possible, seek out new friendships in the space, and enjoy this crazy little world of NFTs as well as you can.
What Is Floor Price – NFT Pricing Conclusion
And here we are, at the end of our road. There are a couple of things that you may take from this article. First of all – floor prices can mean many things, and higher floor prices don’t always mean that the product itself is better. Secondly – panic selling or buying results in only one thing. Panic. Investing should not be considered as a few months, but a long-term vision.
And finally – NFT investment is not an easy market, but it’s a place where you can earn some good money if you can navigate it the right way. And we hope that with our help, you can do just that. It’s always a good thing to evaluate your investment. To see what generally bring some benefits. Are your investments declining or are their listing price going up? You can notice negative results pretty early, so be sure to look out for those.
Thanks for checking out our article on the floor price in the NFT space. We hope you enjoyed this one and encourage you to check out the other articles on our site. There is much to learn about NFTs there, so be sure to browse through it all! Stay safe, and we will see you in the next one!
