Anatomizing the Returns of Non-Fungible Tokens: Evidence From the CryptoPunks

We use transaction data on CryptoPunks to anatomize the factors affecting the returns of non-fungible tokens (NFTs). Our results show that trading volume in the short period before a trader buys (sells) CryptoPunk relates negatively (positively) to the returns on NFTs, suggesting that when market trading volume is at a high level, NFT owners are better off on the sell side, and investors interested in NFTs should avoid joining the herd. Turnover of a token tends to harm its returns. Finally, both traders’ willingness to purchase and trading experience have a positive impact on NFT returns within short-term investment horizons.

Keywords: CryptoPunks; NFTs; Non-fungible tokens; COVID-19; Ethereum

JEL Classification: C14; C22; G14; G15

Suggested Citation: Suggested Citation

Wang, Jying-Nan and Lee, Yen-Hsien and Liu, Hung-Chun and Hsu, Yuan-Teng, Anatomizing the Returns of Non-Fungible Tokens: Evidence From the CryptoPunks (March 8, 2022). Available at SSRN: https://ssrn.com/abstract=4105500 or http://dx.doi.org/10.2139/ssrn.4105500