Abstract
We provide the first study of time-varying and cross-sectional properties of liquidity in the nascent and rapidly growing non-fungible token (NFT) marketplace. Using transaction-level data, we document important weekday patterns in NFT liquidity. Despite the decentralized nature and infancy of the marketplace, we show the overall determinants of NFT liquidity have several parallels with highly developed financial markets. We then study how the arrival of new information impacts NFT marketplace liquidity. By reducing information frictions, NFT news increases NFT liquidity, especially when the media source tends to provide more specific or technical information about NFTs. Overall, our findings deepen our understanding of how liquidity impacts newly developed marketplaces.
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