The behavior and determinants of illiquidity in the non-fungible tokens (NFTs) market

Value creation and capture in decentralized finance markets: Non-fungible tokens as a class of digital assets

“…While there is debate around whether art pieces can be considered capital assets, this classification is clearer for art NFTs. Art NFTs are more financially liquid than, for instance, paintings on canvas (Wilkoff & Yildiz, 2023). Our findings indicate that the NFT art market is far less segmented, more international, and, in general, more open than the traditional art market.…”

“…This is especially relevant in the case of art NFTs because art has long been seen as an asset class itself: artworks have been considered capital assets that yield their owners financial value (Campbell, 2008;Soloveichik, 2010;Stein, 1977), as consumable assets that provide nonpecuniary value to their owners (Mandel, 2009(Mandel, , 2015Stein, 1977), or as stores of value and wealth (Anson, 2002;Burniske & White, 2016;McAndrew, 2012a). However, physical artwork can be cumbersome to trade and, as such, may be considered a rather unattractive investment class (Kräussl et al, 2016;Mandel, 2015) compared to more liquid art NFTs (Wilkoff & Yildiz, 2023). Nonetheless, artworks can rise drastically in price over time and are increasingly used as a form of investment (Campbell, 2008;Kräussl et al, 2016;McAndrew, 2012b).…”

Risk analyses of the crypto-market: A literature review

“…Liquidity is an important characteristic of the market, influencing the investment costs and implicitly the desirability to trade. The crypto-market suffers from illiquidity, especially during extreme price movement periods Wilkoff and Yildiz, 2023). Examining this risk from the perspective of a limited supply asset such as bitcoin, it becomes apparent that liquidity risk is indeed significant.…”

Market Manipulation in NFT Markets

“…Oh, Rosen, and Zhang (2022) compared the returns of experienced and inexperienced investors, Bao, Ma, and Wen (2022) examined herding behaviors and found inexperienced investors' entering can be a trigger of herding, Borri, Liu, and Tsyvinski (2022) and Kong and Lin (2022) attempted to construct market indices and conduct related analysis. Wilkoff and Yildiz (2023) examined the effect of media coverage on NFT market liquidity, and Falk, Tsoukalas, and Zhang (2022) discuss how NFT royalties to creators are determined. In the equity crowdfunding space, Meoli and Vismara (2021)…”

“…The list of NFT collections was hand-collected in October 2021 from the " on average. This suggests attention from investors and the arrival of new information will drive the price much higher than usual (Wilkoff and Yildiz, 2023). Therefore, it is logical to expect that information advantages, such as insider trading and false investor attention from wash trading, may contribute to a collection's investment return and longevity.…”