If you’re just starting out in an NFT field, just getting to know the NFT space, you’ve probably heard of the term floor price at least once. There is one simple thing to understand here. Because tokens are unique, they are the true digital counterparts of real things, in particular works of art. These tokens also bring order – since digital objects can be copied indefinitely, NFT secures ownership of them. An NFT is a confirmation that the digital file is indeed the original. But how does this relate to the understanding of floor price?
Each such token is unique, with specific characteristics that make it uncommon or in demand. But because of these characteristics, it can also be difficult to determine the exact worth of an NFT. So why do we need the floor price of an NFT?
Tangible works of art and other physical items on the market have a set worth, but during the purchase of tokens, crypto enthusiasts may find it difficult to estimate the real value. It is in such situations that the NFT floor price indicator comes in handy. So, today we will discuss the price floor for NFT in more detail and how you can use it.
If you want to learn even more about NFTs – check out this ultimate guide to them by our CEO, Mykhailo Sitalo!
Starting with the basics: what is a floor price?
In fact, it’s very simple. Let’s break down the floor price term in order and give a simple example:
- So, the floor price in the field of NFT is the minimum price of the cheapest token within an NFT collection.
- Such an important indicator is considered one of the most frequently used when it is necessary to evaluate an NFT project.
- For example, the floor price of the specific NFT collection today is $10,000. This will be the lowest price of the defined NFT collection and the minimum opportunity to join such an NFT project.
It’s simple – the floor price is the lowest cost for which any of the project participants is ready to give up their token from a specific NFT collection to anyone who wants it. It also shows how much people are willing to spend to own an NFT from the project. In fact, the lowest price is a very important indicator by which to determine the worth of a specific collection. You can just look at the price floor at which the NFT project sells its tokens and you can conclude about its worth.
How in the field of NFT is the floor price calculated?
In fact, the floor price is set by crypto enthusiasts from the NFT space who own tokens within the project – the bigger popular it is, the higher the floor price. A sharp decrease in the floor price may indicate that the collection is losing its former popularity. Here are some important factors that can determine the fall or rise of the floor price of NFT in a particular project today:
- One of the most obvious factors for NFT floor price change is whether the request is high or low. Everything is simple enough – if the request for this token in the NFT marketplace is small, then the floor price will be lower and vice versa.
- Another thing to check for floor price is whether these NFTs are of real worth and interest to investors and holders. Of course, projects that have guaranteed the real worth of NFTs to their owners will set a higher floor price. Here you not only have to explore the NFT marketplace but also read additional resources to learn more about certain NFTs.
- One more factor in the NFT floor price is incredibly influenced by the reputation of the creator of the project. Here it is clear that brands that have already formed trusted relationships with crypto enthusiasts have the right to ask for a higher floor price for NFTs. Even if two famous creators release teamwork, the floor price for their NFTs will initially be high.
Here it is very it’s essential to question yourself for what purpose you are going to buy NFTs. Will NFTs be of real value and use to you, or are you doing it just for the hype?
What is a floor sweep in the NFT field?
In the field of NFT, there is still such a term – sweeping the floor. In the NFT community, it refers to the acquisition of a huge number of NFT assets – especially those tokens that form NFT collections.
In the NFT field, this expression is used to refer to both NFT project holders and customers. If NFT owners sweep the floor, it means they buy up all their NFTs at the smallest cost. In the same understanding, the customers bought all or most of the available NFT from a particular project. Newcomers do not even guess, but in that way, the NFT owners can be manipulated the NFT floor price.
How to avoid manipulation with floor price?
As we mentioned above, the NFT floor price can be easily manipulated. While floor price acquisition is a great strategy for newcomers to the NFT world, the floor price is easy to modify. It is very common for newly created projects with great potential to be aggressively bought up by a person or group in order to artificially increase requests for tokens. So bought NFTs can be sold at a higher floor price – just as speculators buy different things and then resell them at a much cost.
To protect yourself, you need to pay close attention to projects with a small number of participants, whose NFTs were also bought up. Most often, this could be done to artificially increase the floor price of the collection and its total value. We recommend looking through the history of buying/selling so as not to fall victim to speculation with the NFT floor price.
Ways of performing the analysis of floor price
There are NFT floor price trackers for such purposes as CryptoSlam, icy.tools, or NFT Price Floor (you can find other options online). Such trackers have all the necessary features to bring it much easier for you to track the NFT floor price. Such services quickly and frequently update data about NFT floor prices for a large number of collections, so it will be difficult to miss launches.
If you are looking for such tools to track NFT floor prices on your own, be sure to look out for watch lists, special value alerts, and current market valuation. These additional features will make your job of monitoring the NFT floor price much easier. You have to pay for some services to monitor the NFT floor price and you should really make sure that all the tools presented on the site are effective. So, you may have to try several floor price monitoring services to choose the best one for the long term.