Click and read on to find out more about veblen goods and how we can use them to predict prices.
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We’re going to investigate veblen goods and how NFTs could be one.
- What is a Veblen good?
Luxury goods like Rolex
They’re defined in the most basic sense as:
- if they fall in price less people want them 📉
- they’re in higher demand if prices goes up 📈
- Veblen goods are basically class dividers
Many in the upper close use them as a way to distinguish their wealth visibly.
- Veblen goods are wealth and status symbols
You show off your veblen good to others
A high price helps make it more exclusive and impressive, just like… NFTs.
- Where are Rolex prices going?
I’ve checked a number of rolex forums and subreddits for sentiment
They believe the economy impacts Rolex and it’s going down further 📉
- I’m not convinced, more people will buy NFTs if the price goes lower, they’ll become more accessible
If they’re a veblen good, less people will buy them if prices go down!
And that seems to be what’s happening, we’re losing people in the space as price goes down…
- Okay, so if NFTs are a veblen good, when will veblen goods like Rolex go up?
Lets zoom in on that first chart I showed you
Looks like there’s more to go below for Rolex
- That Rolex index chart nearly 100% lines up with all NFT collections
The main difference being the blur token
Which might’ve accelerated the drop in NFTs recently before the big Rolex slide down📉
- So what affects veblen goods?
Look at this point where the Fed started increasing interest rates vs the Rolex index chart.
It’s bang on, and also matches many NFT collections.
D-day in around : February ish 2022.
- But, interest rates were higher in the past and Rolex went up?
Things changed with disposable income.
For example, in the past, housing was exponentially cheaper, so interest rates didn’t hurt as much
- People simply have less disposable income
For the first time in 60 years we’ve lost significant disposable income quite suddenly
Look at the graph below on the far right, it was supposed to trend upwards.
- Disposable income adjusted for inflation, zoomed in
Oh yeah, this is bad 📉
We need that to be trending up to see a relief in the Rolex and probably also NFTs
- But rich people don’t care about interest rates or disposable income
Rolexes and NFTs are more Type 2 veblen goods, which is to say many people here are performing “pecuniary emulation”
In english, they want to emulate being rich and gain status, see:
- So when do jpeg NFTs go up again?
I’d look for 2 main indicators :
A. The real disposable income charts
B. Interest rate charts
They need to change trajectory to see a possibility of real recovery
- Is there a possibility NFTs don’t recover?
Yes, absolutely, many NFTs won’t make it
These factors can destroy a product’s veblen good status:
- Brand dilution
- Negative publicity
- What NFT collections will persist and recover best as a veblen good?
The ones that:
- cater to being high status symbols
- put extreme effort into maintaining floor price
- create positive public relations and impressions
- Sorry, $10 NFTs produced in mass will work!
No, I don’t think it will
We have low priced collections already and no one’s lining up to buy them unfortunately
unless something changes dramatically