THE RELATION OF NON-FUNGIBLE TOKENS (NFT) WITH BITCOIN AND ETHEREUM: A NEW ASSET OR A DERIVATIVE OF CRYPTO CURRENCIES?

Abstract

NFT is a new form of digital art and a financial asset which was introduced in 2017. Since NFT is based on blockchain technology and its trade is dominated by Ethereum, one expects that NFT is interrelated with Bitcoin and Ethereum. The purpose of this study is to analyze the long-term and short-term relation of NFT with Bitcoin and Ethereum with Johansen Cointegration analysis and Granger Causality test. The time span split as before and after July 2022. The results suggest that there is no long-term relation of NFT with Bitcoin and Ethereum. In the short-term, NFT Granger causes Ethereum in the first period. In the second period, no short-term causal relation of NFT is evidenced with Bitcoin and Ethereum. The results suggest that NFT is evolving to a new form of art and a financial asset largely independent from crypto market.