NFTs are mostly short-term investments, with buyers hoping for a quick buck, but to explain why NFTs have a price we have to dig deeper and visit the weird subset of NFT buyers who are not investors.
To say that NFT price is market-determined, and driven by narratives, is not controversial. But there is something very peculiar about it, very different from how coin and token prices are also driven by narratives.
Bitcoin, for example, is mainly driven by only two narratives: means-of-payment and store-of-value. An ERC20 token issued by a team is driven by the story of why the enterprise will be a success. That is but one narrative, or, at best, several pitches for the same thing.
NFTs are different because the number of narratives an NFT can belong to is… infinite. Here are two examples of people ignoring the main/official narratives of the NFT collections (the ones provided by the issuers) and creating their own narratives instead.
The first example is a (or the?) pink hair vault. As the name says, the collector seems to be collecting pink-haired NFTs across collections.
https://opensea.io/pink-hair-vault
The second example is a “GSR blue vault”. Not as focused and specific as the collection above, here the collector seems to be buying blue-chip NFTs with something blue in them, in order to match the name/theme of their company. In this case it seems a bit of a flex, as it’s an investment fund. But the goal does not matter, it’s still a personalized narrative.
These are the first two found on a quick search, but there are many others.
How does this relate to price? Well, it’s not a direct, but a roundabout connection. The speculators and the investors, the shared-narrative buyers, are providing the upward pressure on prices, but it is the private-narrative buyers that provide the bottom support. The price of an NFT will almost never go to zero, because to someone, somewhere — it tells a story.