Azuki #3290
Azuki #3290 Source: OpenSea
Art

Does the New AI NFT Pricing Bot Work? We Tested It To Find Out

Disclaimer This article is for general information purposes only and isn’t intended to be financial product advice. You should always obtain your own independent advice before making any financial decisions. The Chainsaw and its contributors aren’t liable for any decisions based on this content.

There’s a new AI NFT pricing bot on the market. With the help of artificial intelligence, traders may soon be able to get a better handle on the often-volatile NFT market and make more informed investment decisions. Digital asset management platform CoinShares released a new experimental artificial intelligence Twitter bot that traders may be able to use to determine a fair price for some non-fungible tokens (NFT).

CoinSharesNFTAI is an experimental project that uses different inputs to determine what it believes is a fair price for a particular NFT. To use the bot, you first need to find the OpenSea link for the NFT you’re interested in. Then, you tweet this link to the bot, and it will respond with its opinion of the price. The bot considers various data points, including the performance of similar NFTs, market trends, and social media sentiment.

The AI bot, developed by CoinShares’ team of data scientists and blockchain researchers, is designed to analyse various data points in the NFT market to provide traders with insights into the performance and trends of specific tokens. According to CoinShares, this information can help traders determine the fair price for a particular NFT and make more informed investment decisions.

According to the bot’s research paper, the algorithm builds upon the hedonic model to construct a price index from “thousands of NFT transaction records.”

While the use of AI in cryptocurrency trading is still relatively new, many experts believe that it has the potential to become a powerful tool for traders in the not-too-distant future. CoinShares’ bot is a promising development for crypto, offering traders a new way to navigate the rapidly evolving NFT market.

At the same time, however, there are some concerns about the possible risks of relying on AI for trading decisions. Some experts warn that the bot could be easily manipulated by malicious actors or prone to making biased or inaccurate predictions, potentially resulting in significant financial losses for traders.

The CoinShares bot runs an algorithm weekly to check some cryptocurrency projects’ prices. This includes blue chip projects such as CryptoPunks, Bored Ape Yacht Club, Clonex, Moonbirds, Doodles, Azuki, and others.

Announcing the bot, CoinShares said, “Pricing NFTs is no easy task. Their value is volatile and millions of them are available on the market, from established projects like Bored Ape Yacht Club to more obscure artists with no trading history.”

I tried the bot out on some of the NFT collections and communities I’ve been a part of, and its grasp of transactional data is impressive – but as with many AI tools, it may still fall short regarding the nuances of context.

The bot gave the MAYC I asked to be valued a price of 16 ETH; but is currently listed at around 14 ETH on OpenSea, following the price reticence on Yuga Labs properties that have arisen since the announcement of the SEC probe.

Overall, the bot prices Bored Ape Yacht Club’s artworks significantly higher than their current listed prices on OpenSea, perhaps indicating that the bot believes the market undervalues the projects. If the project can establish a strong track record, these predictors may be a powerful tool for traders looking to capitalize on the NFT market.

When valuing Moonbirds, the bot again suggested the collection was undervalued, setting a fair price for #5276 at 11.1 ETH, above the current sale price of 9.7 ETH. 

Interestingly, Azuki #3290 was estimated below its current sale price, with the bot putting it at 11.1 ETH, while it’s listed for 11.7…

The bot is still in its early stages, and it will take time to get better at valuing NFTs. In the meantime, however, traders should be cautious about using it as their sole source of information when making investment decisions.

But while the bot’s price predictions may not be perfect, they offer a valuable starting point for traders looking to enter the NFT market. This bot is still developing, and I’m excited to see how it grows. For now, though, I’ll be sticking to good old-fashioned human judgment when valuing my NFTs. I don’t need an AI bot to tell me my bags are going to zero.

It’s worth noting that AI crypto trading algorithms and bots are nothing new, even in the far-more predictable world of fungible tokens. Platforms like CryptoHopper have yet to achieve mainstream success or usage in the community, showing the hesitation of traders to abdicate responsibility for their activities to a bot.