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Bubble Prediction of Non-Fungible Tokens (NFTs): An Empirical Investigation

Author

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  • Kensuke Ito
  • Kyohei Shibano
  • Gento Mogi

Abstract

Our study empirically predicts the bubble of non-fungible tokens (NFTs): transferable and unique digital assets on public blockchains. This topic is important because, despite their strong market growth in 2021, NFTs on a project basis have not been investigated in terms of bubble prediction. Specifically, we applied the logarithmic periodic power law (LPPL) model to time-series price data associated with four major NFT projects. The results indicate that, as of December 20, 2021, (i) NFTs, in general, are in a small bubble (a price decline is predicted), (ii) the Decentraland project is in a medium bubble (a price decline is predicted), and (iii) the Ethereum Name Service and ArtBlocks projects are in a small negative bubble (a price increase is predicted). A future work will involve a prediction refinement considering the heterogeneity of NFTs, comparison with other methods, and the use of more enriched data.

Suggested Citation

  • Kensuke Ito & Kyohei Shibano & Gento Mogi, 2022. "Bubble Prediction of Non-Fungible Tokens (NFTs): An Empirical Investigation," Papers 2203.12587, arXiv.org, revised Jun 2022.
    • Handle: RePEc:arx:papers:2203.12587
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    Cited by:

    1. Ludovic Tangpi & Shichun Wang, 2022. "Optimal Bubble Riding: A Mean Field Game with Varying Entry Times," Papers 2209.04001, arXiv.org, revised Jan 2024.
    2. Pascal Frank & Markus Rudolf, 2024. "Is the Metaverse Dead? Insights from Financial Bubble Analysis," FinTech, MDPI, vol. 3(2), pages 1-22, May.
    3. Urom, C. & Ndubuisi, Gideon & Guesmi, K., 2022. "Quantile return and volatility connectedness among Non-Fungible Tokens (NFTs) and (un)conventional asset," MERIT Working Papers 2022-017, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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