Written by your friends at NeptuneCircle (Stephen, Mike, and Kris)

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If you would like to take a sneak peek at our model outputs for August 2022, please follow us on Twitter and send us a message.

If you are in the NFT lending/collateral space and would like to speak with us, please feel free to reach out to [email protected]

Previously, we have jotted down our methodology for predicting NFT floor price throughout the month. Here is an updated output of how our model has been performing for the past few weeks since the last article. Overall, we see that the model is quite predictive on a month-to-month basis.

The way we back test our model is the following: for example, if the valuation date is 3/1/2022, the model only uses data available on or before 2/28/2022 and reaches a prediction (blue line dots). This datapoint is then compared with the actual floor price (orange line dots, where we use the average floor price for the entire month of March, 2022).

While, amid the first downward cycle for NFT, we found that projects with a solid community behind them could play defensive features for the NFT portfolio.

The different intrinsic values (actual floor price minus estimated floor price based on the studio's cash flow) for each project evaluated the community value. After reviewing the data, we found that the growth rate (>0%) of Twitter followers was driven by the FOMO sentiment adapted by the NFT prices rally. The growth rate started to drop or even stay flat as NFT gains paused and fell, which is dragged by shrinking NFT trading volume amid extremely fearful market sentiment ignited by black swan events in the crypto market.

Given this environment, without new members, the confidence of existing holders in projects is represented by the volatility of value differences amid a bear market. Looking at Blue-chip projects like BAYC and PROOF, their NFT prices fell but had cemented in late Jun. We attribute these to their community support and the studio that continually brings values into the community for members. Therefore, we are upbeat about these projects and expect them to outperform others amid a downward cycle.

Again, if you would like to speak with us, please feel free to reach out to [email protected]