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As is true for the findings of the correlations between both markets, the literature about NFTs value drivers is quite emergent too. As the NFT ecosystem has grown and developed, market researchers have been becoming more and more aware of various correlations.

With the launch of six new indices used for tracking the larger NFT market, analytics firm Nansen has found that NFTs might in fact have inverse correlations to the cryptocurrency markets. The data provided by Nansen indicates that its NFT 500 Index (in terms of ETH) has a -0.46 correlation coefficient with Bitcoin. Describing the theory of correlation, a Nansen report explained that correlation coefficients of one or greater mean Nansens NFT-500 data has a positive correlation with the cryptocurrency market, which indicates the variables are moving at locked-stops.

According to data calculated from 1st of January until last month, Nansens NFT-500 data shows a -0.46 correlation with bitcoin, and 0.6 correlation with Ethereum. According to Nansens NFT-500 data, the price of the NFTs exhibits a negative correlation with cryptocurrency spot prices. When the Ethereum price of the NFTs is higher, DeFi tokens are usually priced lower in USD. When looking at NFT prices in USD, there is a positive correlation between these two variables. NFT and crypto markets might not correlate as much as the capitulation might indicate. The study suggests there could be some movement of convergence between the NFT and cryptocurrency spaces.

Coinbase quoted data shows a very small correlation between NFTs and cryptocurrencies, in terms of both sales volumes and prices. The factors driving the volatility of the crypto markets are the same factors driving low-movement in the NFT market space. Uncertainty in the crypto market will follow with uncertainty in the NFT market too. Do not forget that NFT platforms will be playing a more central role across all the Metaverse.

Let’s not forget the fact that NFT prices are listed in terms of cryptocurrencies, and most individuals that hold an NFT are also invested in cryptocurrency. Because the majority of NFTs are recorded in Ethereum blockchain, the majority of NFT values are listed in cryptocurrency denominations of ETH—this is where the link between cryptocurrency prices and NFT values is most obvious.

In the end, the relationship between crypto prices and NFT values is fuzzy, but it is possible the picture will be clearer once the current crypto winter eventually clears up. The indications indicate that cryptocurrency price behavior may have some utility for understanding NFT price patterns.

Another potential explanation of recent mean-reversions in NFT markets centers around the price of gas in Ethereum flow-chain. The NFT market, which is built mostly on Ethereum blockchain, has seen rapid appreciation of both its value and volume, with Ether, its chain’s native token, enjoying massive appreciation. As the cryptocurrency market has undergone a correction as a result of the Russian-Ukrainian crisis, NFT has shown better results when priced in its favorite Ethereum blockchain, according to the Nansen cryptocurrency analytics company. The data from the NFT-500 Index by the crypto analytics company Nansen (denominated in Ethereum) also shows strong negative correlations with the less-known Decentralized Finance (DeFi) tokens listed on the Bankless DeFi Innovation Index. Show Source Texts

A fall in digital assets prices does not necessarily impact non-fungible tokens (NFTs) performance, since they keep on rising even if cryptos fall, according to distributed application (dapp) shop DappRadar. So far this year, the cryptocurrency markets have seen volatile fluctuations in prices for the major cryptocurrencies. Cryptocurrencies led by Bitcoin and Ether tumbled in the context of the wider tech sell-off, solidifying their position among investors as high-risk assets that are prone to being dumped at moments of market stress. Show Source Texts

The broader utility definition actually encompasses all the NFT market, and provides one, potentially, though exceedingly broader, interpretation for NFTs value and prices. NFTs mature, and usage cases are established which are sharply defined and different from the speculations which characterized the 2021 NFT market, there is little doubt their prices will increase without being tied to the cryptocurrency prices, and the asset class will gain its own life.