When an average user starts their NFT journey, theyâ€™re more likely to start with a smaller budget than some! And so, a lot of people encourage these users to go find cheap NFTs by looking for the NFT floor price of each collection. But, can you actually do that without a proper understanding of what it means or how to benefit from it?Â
In the world of non-fungible tokens, having little or no knowledge to back you up is the worst decision ever! It could potentially lead you to fall for an NFT rug pull, become a victim of floor sweeps, and more. However, all of that can be avoided by doing a little research beforehand! And, luckily for you, becoming an NFT master is completely FREE. All it takes is a swift click of a button and youâ€™re there! SO, to do exactly that, click on the button below for access to our FREE NFT hub!Â
Or, keep reading if youâ€™re just interested in understanding an NFT floor price only. Weâ€™re here to explain what it is, how it works, and how it affects YOU! Also, weâ€™re going to discuss the possible outcomes of floor sweeps in different scenarios as well. So, make sure to read to the very end and take notes! This is probably one of the most important parts of NFT basics you could learn.
NFT FLOOR PRICE EXPLAINED
What is NFT Floor Price?
First, weâ€™re going to brief you on what an NFT floor price is! So, the NFT floor price is the minimum amount that you can spend to own an NFT in a project. Aka, the lowest price you can pay to be a part of any NFT collection.
Therefore, an NFT floor price represents the lowest value for an NFT in a market. Therefore, it is a price that a specific NFT holder set in a certain project. And, it is cheaper than all the other listings of the same project.Â
Ex: On OpenSea, the floor price for the Bored Ape Yacht Club collection is currently 99.25 ETH. This means that the cheapest option you can find to buy an Ape is 99.25 ETH!
How is the NFT Floor Price Calculated?
Although there is no direct formula for calculating the NFGT floor price, there are many factors that affect the value. These factors come from any kind of change within the NFT community and the holders in a project. However, it usually comes down to the following factors:
– The demand and supply for the NFT â€“ the more demand there is for the project, the higher the NFT floor price
– The NFT utility that they offer â€“ when brands offer NFT utilities with them, this increases the value of the NFT itself!
– Brand Reputation â€“ a well-established collection often has a higher NFT floor price than someone new to the market
– Collaborations â€“ projects that come out of NFT collaborations often have a higher value than others
Types of NFT Floor Price
This NFT floor price changes from time to time depending on the current market value. So, it is updated in real-time according to prices on the marketplace theyâ€™re using. You can also use floor price charts to track NFT collections like nftpricefloor.com or cryptoslam.io
Decreasing Floor Price
Another type is a project with decreasing floors. However, this is not necessarily a bad thing nor is it an indication of a scam. Prices fluctuate in the NFT industry just as they do in any other industry! This could be to new developments, new holders, added utilities, updated roadmaps, and so on! So, before you panic sell, make sure you research the project first!Â
Increasing Floor Price
And then, thereâ€™s the increasing floor price which is also called pumping! Although, for the most part, an increasing NFT floor price is a good sign. However, it could also be an artificial pump to gain more hype and attention! So, donâ€™t impulse buy!
What are NFT Floor Sweeps?
Sweeping the floor is when someone buys non-fungible tokens in bulk from the same collection at the floor price. This is either done by the buyers or the project owners themselves. They either buy all the remaining available NFTs in a project or multiples.Â
A buyer might do this because they expect an upcoming spike in the NFT collection and wants to benefit. Or, this might also be a sign of a potential rug pull because theyâ€™re manipulating the floor price. In other words, attempting to drive up fake demand.
The sweepers sell these non-fungibles at a higher than the floor price, thus raising the project’s NFT floor price and overall value.Â
To avoid falling victim to an NFT floor sweep and price manipulation, always check the transaction history of the NFT. Join their Discord groups and check their social media pages to make sure it is all legitÂ