Abstract:
The study examines the risk and return characteristics of the top three NFT collections (as of January 2022), namely- Bored Ape Yatch Club, Cryptopunks and Mutant ape Yatch Club. The investigation is motivated by the recent surge in the NFT activity on the part of creators, investors, and traders. This study helps investors and creators in understanding the risks associated with NFTs and to spot opportunities depending upon their risk-taking ability. The tools and techniques used for analysis were moving average, standard deviation, regression, Var. Analysis was done by using the last trading price of everyday for all the chosen NFTs for a specified period of time. The study suggests that investors should have high risk-taking capacity given the opportunity of high returns, and creators should analyse the market well to gain maximum returns. But given it's volatility and lack of a proper price determining model, long term investment decisions become sceptical. To be on a safer side, analysing the bitcoin market situation can help in forecasting the NFT market upto an extend.
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