Abstract
Non-fungible tokens (NFTs) can be used to represent ownership of digital art or any other unique digital item where ownership is recorded in smart contracts on a blockchain. NFTs have recently received enormous attention from both cryptocurrency investors and the media. We examine why NFTs have gotten so much attention. Using vector autoregressive models, we show that Bitcoin returns significantly predict next week’s NFT growth in popularity, measured by Google search queries. Moreover, wavelet coherence analysis suggests that Bitcoin and Ether returns are significant drivers of next week’s attention to NFTs. These results indicate that the remarkable increases in prices of major cryptocurrencies can explain the hype around NFTs.
Highlights
The non-fungible token (NFT) market has shown a significant increase in popularity in2021
When wavelet coherence analysis is used, we find that investors are more attracted to NFTs after increases in both Bitcoin and Ether returns
This paper utilizes Google search queries to analyze the drivers of attention to nonfungible tokens (NFTs)
Summary
The non-fungible token (NFT) market has shown a significant increase in popularity in. The NFT market went from total daily sales of about USD 183,121 in 2020 to an average of USD 38 million in 2021 Some NFT examples include the sale made by the artist Beeple, who sold a piece of digital art for USD 69 million, or the sale of the first. Tweet made by Twitter CEO Jack Dorsey for USD 2.9 million. Two others popular NFTs are the CryptoPunks and Decentraland. Larva Labs, surpassed USD 1 billion in sales in 2021. MANA, the native token of Decentraland, a metaverse platform where users can buy and sell virtual properties, spiked 400% and hit an all-time high market capitalization of more than USD 6 billion after
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