<p>Despite having decreasing popularity, especially much lower trading rates, NFTs are still considered a fruitful field for investors to dip their toes in. It cannot be denied that a digital image can cost millions of dollars sounds very intriguing, however, how investors know which one is the next NFT to bloom is a big concern over communities. That’s why there appears a variety of communities signaling “gems” in thousands of NFT collections. Before knowing exactly which advice should investors listen to in these communities, they must understand essential metrics that are used to evaluate NFTs. Let’s find out in this article with <a href="https://www.builder.news/" alt="Builder.news" title="Builder.news" target="_blank" rel="" class="">Builder.news</a>.</p><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed4930ca3972a1a8e6023f659fee92.jpg" alt="Metrics to evaluate NFTs" title="Metrics to evaluate NFTs" width="600" height="334"></p><h2>1. Floor price</h2><p>Crypto investors might find the “floor price” term familiar. It refers to the lowest price that an asset is sold for, in this context, the assets are NFTs. In other words, the floor price is the least amount of money that an investor pays to own an NFT. The floor price is a useful indicator of how well a community will accept an NFT project as such the floor price will rise as demand rises.</p><p>Buying an NFT at the floor price is thought of as a solid entry strategy since it offers a simple way for new participants to join an NFT race. Because it is a great statistic for determining how well-liked a community is with an NFT project, consequently, the floor price will increase as demand increases.</p><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed4930ca397955a8e6023f659fee92.jpg" alt="BAYC floor price on OpenSea" title="BAYC floor price on OpenSea" width="600" height="310"></p><h2>2. Trading volume</h2><p>Trading volumes that investors always see on almost every NFT assessment tool display the overall demand for the project and relate to the total volume exchanged. The amount of trading indicates how well-liked an NFT collection is.</p><p>By looking at the total volume exchanged, it is simple to tell if an NFT project is currently in demand. The market tends to be more liquid the larger the volume, which is one of the most important factors to consider if the mentioned NFT collection might bring investors benefits or not.</p><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed4930ca397efca8e6023f659fee92.jpg" alt="NFT trading volume" title="NFT trading volume" width="600" height="393"></p><h2>3. Number of sales</h2><p>Investors can determine historical and present interest in an NFT collection by looking at the number of NFT sales. If an NFT collection has a lot of recent sales, it can indicate that demand is growing. However, investors must take into account the movement's direction in regard to the floor price. It may be a sign of declining interest or perhaps panic selling if many NFT holders are selling and the floor price is falling.</p><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed4930ca3983a9a8e6023f659fee92.jpg" alt="BAYC NFT sales" title="BAYC NFT sales" width="600" height="213"></p><h2>4. Number of unique holders</h2><p>The number of unique holders is the next metric used to assess an NFT's value. To gauge the size of a project's community, investors must not skip utilizing this indicator. More word-of-mouth spreads in bigger communities, which in turn helps sell the project to more prospective purchasers. Unique holders are calculated on some top-notch crypto analysis platforms including Cryptoslam.io, Dune.xyz Analytics dashboard.</p><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed4930ca3987f7a8e6023f659fee92.jpg" alt="NFT unique buyers reports" title="NFT unique buyers reports" width="600" height="63"></p><p><em><strong>&gt;&gt;&gt; Related:&nbsp;</strong></em><a href="https://www.builder.news/crypto-insights/who-are-industry-giants-joining-nfts-IUXBM" alt="Who are industry giants joining NFTs?" title="Who are industry giants joining NFTs?" target="_blank" rel="" class=""><em><strong>Who are industry giants joining NFTs?</strong></em></a></p><h2>5. Rarity score</h2><p>The rarity score, a metric developed by Rarity.tools to assess the potential value of the NFT collection, will likely prove to be the most helpful indicator to assess an NFT. NFTs with greater rarity ratings are often more valuable than ones with lower rarity scores. With this knowledge, NFT collectors may more readily appraise and assess the relative worth of various NFTs.</p><p>On Rarity.tools, generative art and valuable NFTs are ranked according to their rarity. Each attribute of a certain NFT is assigned a Rarity Score on Rarity, and the Rarity Scores for all of those features are combined to provide an overall rating.</p><p>More and more platforms introduce their own rarity ranking including NFT-stats.com, therefore, in order to have the best insights on rarity, investors must understand the scheme they used to make the rarity rank.</p><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed4930ca398c12a8e6023f659fee92.jpg" alt="Rarity score on Rarity.tools" title="Rarity score on Rarity.tools" width="600" height="662"></p><p><em><strong>&gt;&gt;&gt; Read more:&nbsp;</strong></em><a href="https://www.builder.news/crypto-insights/top-9-nft-tools-for-better-crypto-investment-sUiIu" alt="Top 9 NFT tools for better crypto investment" title="Top 9 NFT tools for better crypto investment" target="_blank" rel="" class=""><em><strong>Top 9 NFT tools for better crypto investment</strong></em></a></p><h2>6. Provenance</h2><p>Provenance in the context of NFTs is the history of ownership since its debut in the marketplaces. Due to its ability to use the blockchain to confirm ownership information changes, provenance is a crucial statistic for assessing NFTs. Because only one original can be linked back to the original inventor, your investment is safeguarded.</p><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed4930ca399051a8e6023f659fee92.jpg" alt="NFT provenance" title="NFT provenance" width="600" height="262"></p><h2>7. Market supply</h2><p>Another vital factor that helps investors evaluate NFTs is a collection’s market supply. Supply here refers to the total number of NFTs in a collection. For example, <a href="https://www.builder.news/crypto-insights/azuki-nft" alt="Azuki NFT" title="Azuki NFT - The collection for anime lovers" target="_blank" rel="" class="">Azuki NFT collection</a> consists of 10,000 generative avatar NFTs while the <a href="https://www.builder.news/crypto-insights/pudgy-penguins-nfts" alt="Pudgy Penguins NFTs" title="Pudgy Penguins NFTs and intriguing myths surrounding them" target="_blank" rel="" class="">Pudgy Penguins collection</a> has 8,888 distinct collectible Penguins.</p><p>The NFTs supply influences how the collection’s value is perceived. High-supply collections typically have lower market values for each NFT. In contrast, due to the novelty and scarcity of each piece, collections with little availability sometimes have higher floor pricing.</p><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed4930ca399452a8e6023f659fee92.jpg" alt="BAYC market supply" title="BAYC market supply" width="600" height="304"></p><h2>8. Social mention, social engagement</h2><p>It cannot be denied that some NFTs gain their value thanks to rising interests in certain groups of investors. In essence, the community is one of the most significant intrinsic values of an NFT collection. To NFT collections that show no utilities, and no roadmap like <a href="https://www.builder.news/crypto-insights/what-makes-the-world-head-to-goblintown-nft-1jX4L" alt="What makes the world head to Goblintown NFT?" title="What makes the world head to Goblintown NFT?" target="_blank" rel="" class="">Goblintown.wtf NFTs</a>, support from a large group of people means a lot. Therefore, social activities reports reflect how the community reacts to the subject, in this case, respective NFT collection.</p><p>In other words, this kind of statistics will provide a comprehensive report that helps investors know exactly what people are talking about in the collection, and how significant the interest of the community in the collection is… Consequently, accumulating with the abovementioned metrics, investors can make the right decision if the collection is worth the money.</p><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed4930ca399866a8e6023f659fee92.jpg" alt="Azuki social activities" title="Azuki social activities" width="600" height="212"></p><h2>Last words</h2><p>Market dynamics practically decide how valuable NFTs are, making it hard to accurately forecast where the NFT industry will go in the future. However, by conducting thorough market research and utilizing the metrics above, investors can raise some chances of success from NFTs.</p><div class="pr-block-special"><strong>Disclaimer:</strong><br>Disclaimer: This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

Check out top 8 useful indicators to assess NFTs.

8 handy metrics to evaluate NFTs