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NFT Floor Prices

NFT Floor Prices

Beginner

What are NFT Floor Prices?

The floor price of an NFT refers to the lowest-priced item listed within a collection and is considered one of the main metrics used by collectors to measure and evaluate a project’s desirability. It gives buyers an idea of the minimum investment required to own an NFT from a particular project. 

Floor prices are typically a great starting point to develop an understanding of a project's popularity and value. However, a floor price isn’t a reliable indicator of a project’s success. 

Calculating NFT Floor Price

The floor price of a collection is the price of the cheapest NFT in the project. NFT floor prices are updated in real-time and are based on supply, demand, the project’s stakeholders, and current market conditions. The floor price for a specific collection can vary amongst different marketplaces. 

Let's say that the lowest price for an NFT collection is $50. This would make the floor price of the collection $50. Now, if another individual buys the NFT, the new floor price would be the next lowest-valued NFT in the collection. 

What Influences NFT Floor Prices?

NFT floor prices are influenced by a variety of elements. By understanding these different components, collectors can make informed decisions. Here are a few factors that influence floor price:

Market trends

Historic and current events within the market can have a big impact on NFT floor prices. Market trends, such as demand for a specific NFT artist, style of art, positive sentiment in NFT space, NFT traits, and utility, can contribute to changes in floor price.

Rarity or scarcity of an NFT or collection

A key factor affecting the floor price of a collection is the uniqueness and scarcity of the NFT. This is largely based on the popularity and rarity of a collection. As a rule of thumb, the rarer and more distinct an NFT, the higher the floor price. The reason behind this is that collectors and investors often search for unique acquisitions that will increase in value over time. 

Team 

The reputation of the team behind the NFT project can also influence floor prices. NFT collections developed by well-known and trusted developers, artists, and founders usually have a higher floor price. This is because a team with a good reputation and track record is more likely to produce collections that will eventually rise in value.

However, it is important to note that if any team member of an NFT project is involved in negative press or controversy, the floor price of the collection may also be affected.

Hype

The hype surrounding an NFT project has an immense impact on NFT floor prices. Influencers, celebrities, and marketing strategies play an important role in this regard. Influencers endorsing, promoting, and buying into specific NFT projects attract more buyers, which in turn, increases the floor price.

Nevertheless, it's important to remain prudent and exercise caution when following celebrities or influencers who endorse specific projects because they could simply be promoting a project to use their followers as exit liquidity.
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