Nansen began by releasing six indexes to measure the NFT market, segmenting it based on the types of NFTs. The Blue Chip 10 index, which contained the ten largest NFT collections by market cap, the NFT 500 index, which is similar to the S&P 500 index, and others were among the indexes.
The organization then utilized these indices to make predictions about the NFT market’s performance, and the findings show that this sector has been the most lucrative this year. NFTs have increased by 90.9 percent since January 1. This was exclusively true for Ether-denominated NFTs. Those who depended on US dollar denominations gained less than half of that, with a 35.9% gain.
This achievement is noteworthy, particularly in light of the overall success of the crypto market. Bitcoin has lost nearly 17% year to date (YTD) as the Ukraine-Russia war has taken its toll on the leading cryptocurrency, even as its role as a safe haven asset has been called into doubt.
It’s been an even worse year for Ether, the world’s most popular altcoin, with ETH down 31% year to far. NFT prices show an adverse link with crypto spot prices when denominated in ETH, according to the analysis.
The NFT 500 index has a -0.46 correlation coefficient with Bitcoin and a -0.6 correlation with Ether, according to Nansen. The greatest opposing movement of two phenomena is represented by a coefficient of -1, whereas the maximum correlation is represented by a value of +1.
All of this, according to the research, only applies when NFTs are denominated in ETH rather than USD. This, according to Nansen, is mostly related to volatility.
Louisa Choe, a market analyst at the organization, stated to one media:
“The price behavior of NFTs might vary greatly when they are priced in US dollars. This is because the ETH/USD exchange rate is so volatile. Therefore, the correlation values are likewise different. For speculators, this may be an essential consideration when choosing on the currency denomination underlying their holdings.”