Our weekly crypto derivatives analytics report delves into macro events, the current state of crypto and trading signals from spot trading volume, and futures, options and perpetual contracts.

Trump's inauguration on Jan 20, 2025 was preceded by the launch of two meme coins from the Trump family, TRUMP and MELANIA, which quickly garnered billions in market capitalization. Speculation about a strategic Bitcoin reserve being included in the executive orders signed on the first day of his administration led to a significant bullish shift in derivatives market positioning. This shift resulted in an inversion of the term structure of volatility, increased funding rates on long positions and a tilt in short-tenor volatility smiles toward calls. However, when the anticipated bullish announcements didn’t materialize, implied volatility levels decreased, even as realized volatility increased. Despite this, the bullish skew toward out-of-the-money (OTM) calls persisted.

In the perpetual markets, funding rates remained consistently high across almost all assets, continuing beyond the inauguration event. In the options market, realized volatility surged to post-election highs, even as implied volatility levels fell due to an overestimation of the significance of inauguration day for crypto. Overall, positioning across all tenors remained bullishly tilted.

Please check out the report’s highlights.

During the inauguration weekend, perpetual swap trade volumes hit their highest levels in over a month as traders positioned for expected crypto-friendly executive orders. Notably, SOLUSDT perpetuals experienced a significant surge in activity, reaching new all-time highs and a spike in realized volatility. Trump's launch of the TRUMP meme coin on Solana DEXs allowed Solana’s network to surpass competitors in fee generation, highlighting the symbolic choice of a sitting U.S. president to launch on Solana instead of Ethereum.

Perpetual swap funding rates saw minimal repricing despite the lack of significant announcements on inauguration day, remaining at neutral-to-bullish levels across all coins. Open interest data indicated no major changes in positions, even amidst spot price volatility. Consequently, while options markets adjusted short-term expectations, sentiment in the derivatives market viewed the lackluster inauguration day as just one of many opportunities for future positive news in the industry.

Speculation that the incoming president would announce a strategic Bitcoin reserve in his inaugural speech led to a buildup of short-tenor options positions just before the event. This resulted in a significant increase in call buying and the strongest inversion of at-the-money term structure since the Nov 5, 2024 election. While the extreme pricing of front-end volatility has diminished, the strong skew toward OTM calls remains, reflecting a continued preference for upside exposure as Trump prepares to sign executive orders.

Advanced

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Bybit X Block Scholes Crypto Derivatives Analytics Report (Jan 22, 2025): Sentiment Cools While Remaining Bullish Following Trump’s First Day

Figuring out how much to invest in crypto can be even more important than deciding which specific coins you want to purchase. Learn more here.

If you keep up with financial news, it can often feel like you’re hearing a story about a self-made crypto millionaire every other day. However, smart investors know that the reality is a little more nuanced. The crypto market comes with high rewards, but it also has high risks. To be successful, you need to be willing to 

 and make wise choices. This guide will explore one of the most basic things you’ll need to decide on before choosing to jump into the world of crypto — how much you should invest in crypto.

Figuring out how much to invest in crypto can be even more important than deciding which specific coins you want to purchase. Not only does the amount you invest in crypto impact your other finances, but it also determines which strategies you can afford to use.

The simple answer to how much you should invest in cryptocurrency is based on your net worth. Someone with millions of dollars can easily risk a lot more than, for instance, a college student without any savings. Traditional investment advice from financial expert Douglas Feldman 

 people shouldn't invest more than 1% to 5% of their total net worth in cryptocurrency. However, some crypto enthusiasts, such as

 be wise to invest up to 10% of your income in cryptocurrency.

Factors to Consider When Deciding How Much to Invest in Crypto

There's a lot of variation in guidelines for how much to invest in crypto. To find the right amount to invest for your specific situation, you'll need to stop and consider these essential factors.

One of the most important factors in determining how much to invest in crypto is the level of risk you’re willing to consider, or your risk appetite. If you have a high risk tolerance, you can invest more. Risk tolerance is partially a matter of personal preference. Some people are naturally cautious, while others are more comfortable making risky moves. However, it’s also wise to factor in your age. A high risk tolerance can work well when you're young because gradual market growth over the years will help balance losses. However, if you're older and closer to retirement age, a lower risk tolerance is advisable.

When planning to invest in crypto, it's a good idea to consider the best-case scenario as well as the worst. Ask yourself: What will happen if my crypto assets suddenly skyrocket in price and I make thousands of dollars overnight? If you're the type of person who would throw in more money or keep holding onto your crypto until the bubble bursts, it might be smart to reduce the portion of your money that you invest in crypto. The flashy profits associated with crypto can lead to overly emotional decisions that can cause problems for certain types of crypto investors.

, the types of coins you're holding make a big difference. Not all types of crypto have the same level of risk. If you intend to go for a risky investment portfolio with nothing but 

, you probably shouldn't take all your assets and invest them in crypto. However, if you intend to invest in a broad range of reliable coins, especially 

, allocating more of your assets toward crypto is a reasonable choice.

Things change fast in the crypto world, so the same advice doesn't always work in different situations. Any time you’re going to invest in crypto, you need to take a look at crypto market conditions. In a 

, prices are consistently high, so you may want to invest less. Meanwhile, in a 

, prices are low, and you can often get big returns by putting extra into crypto investing.

Your liquidity refers to the amount of easily accessible cash you have at hand. Crypto markets are fairly liquid, since you can remove your funds at any time. However, since crypto is a volatile asset class, trying to remove your funds during a bear market can lead to considerable losses. Before putting large sums into crypto investing, think about when you'll need liquid cash. For instance, if you're going to need a large lump sum for a house deposit or another big purchase soon, you need to invest less money in crypto.

Keep in mind that a lot of the recommendations to invest between 1% to 10% of your money in crypto are based on income. However, the reality is that different people have different budgets. Some may need almost all of their income for things like food and housing, so it's not smart to take all your money and invest in crypto. However, others who have more disposable income left over after managing other budgetary needs can invest in crypto more often.

The cryptocurrency market as a whole does follow certain trends, but crypto investments always fare better if you actually understand projects before you invest. It's a poor decision to put a large portion of your assets into obscure crypto you know nothing about. Informed investors only put significant investment into specific cryptocurrencies if they take the time to 

, understand its real-world utility, explore its pricing history and see how well it performs on crypto exchanges.

What Is a Good Allocation for a Well-Balanced Crypto Portfolio?

Once you figure out how much money you want to invest in crypto altogether, you need to consider how much money to put into each specific crypto. It's important to have a diversified portfolio, so a single coin running into issues won't tank your entire crypto investment portfolio. There are a lot of different ways to invest in crypto.

The simplest investment advice, as suggested by

, is simply to put 60% of your money into Bitcoin and 40% into Ethereum. That's a decent choice if you know nothing about crypto assets but still want to invest in crypto. However, if you're willing to research individual coins and pick your favorites, try this asset spread:

If you are open to some speculative exposure, consider allocating a small percentage (2 - 3%) to emerging sectors like 

Compared to some other investments, such as bonds, cryptocurrency is considered risky. The 2020 - 2024 chart below, detailing Bitcoin and S&P's weekly returns, reveals the relatively drastic peaks and troughs of Bitcoin in comparison to S&P 500. Notably, Bitcoin recorded a weekly drop of over 40% and nearly 30% rise in 2020, thugh its volatility has declined over the years. In contrast, S&P 500's gains and losses rarely exceeded 10% throughout the entire period.

Despite Bitcoin's drop in volatility, it is still considered relatively risky to invest in crypto because of the market’s significant price fluctuations and the proliferation of 

s. Additionally, there are countless examples of people who invest in crypto, jumping onto trends and losing their money when prices on the crypto exchange drop. One

 illustrates these dangers: he became interested in crypto during the pandemic and quickly got hooked upon seeing his portfolio values rise. He invested $50,000 into crypto, and eventually built an impressive portfolio worth $300,000. Following a 

, he had only $5,000 left in his account.

Furthermore, crypto markets are still not fully understood by the public, and are less regulated than traditional investments, so it's easier for malicious actors to take advantage of naive investors. For example, crypto-lending company 

 promised to store customers' assets, but when the company went 

, many users found that the company refused to return their invested funds. A similar issue arose when 

, and investors could no longer withdraw funds from their accounts.

Despite its risk, cryptocurrency fills an excellent niche in the financial world. When you invest in crypto, it can ensure your portfolio is diversified and insulate you from stock market crashes and other issues with traditional investments. Deciding to invest in crypto is also a valid option when you want to work with some higher-risk investments. Even beginning traders can find it useful to place a small portion of their investment funds into some reliable cryptos.

Furthermore, cryptocurrency allows people with tech expertise to make highly informed decisions. Finding your niche is always a useful investment strategy. Those who don't keep up with manufacturers and foreign currency exchange rates might find that they can specialize by choosing to invest in crypto. If you enjoy learning about the latest tech news and following online memes, crypto investments can be a great way to turn your knowledge into profits.

However, even though it often works well to invest in crypto, you still need to exercise some caution before working with crypto exchanges. If you want to invest in crypto, it's essential to follow the classic rule of, "Only invest the money you can afford to lose." Those who take out loans to buy 

 or throw their entire retirement account into crypto can end up losing it all if the markets take a turn for the worse. Like any other volatile asset class, crypto needs to be approached with some common sense.

Deciding how much money to invest in crypto is an essential part of your investment strategy. By considering things like risk tolerance and liquidity, you can create an investment portfolio that addresses your unique needs. When you have the right amount of money invested in crypto, you have the potential to make impressive profits without risking all your savings.

Beginner

how much to invest in crypto, how much to invest in bitcoin

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How Much Should You Invest in Crypto? 7 Factors to Consider

Explore how to participate in the Bybit Copy Trading Gold&FX Fiesta to win rewards. In addition, learn how you can unlock an additional 5,000 USDT prize pool!

Trading in Gold and Forex has long been favored among seasoned investors seeking stability and long-term wealth preservation. However, these markets are traditionally complex, requiring deep knowledge of macroeconomic trends, currency correlations and geopolitical factors. But what if you could tap into these lucrative markets without the steep learning curve?

 — a game-changing solution that enables traders automatically mirror the strategies of experienced professionals. Bybit has now 

, allowing crypto traders to seamlessly diversify their portfolios without needing prior experience in these traditional asset classes.

To make this transition even more enticing, Bybit has launched the Copy Trading Gold&FX Fiesta, an exclusive event offering a 130,000 USDT prize pool to reward participants who trade in gold and forex using Bybit’s Copy Trading Gold&FX. Furthermore, there’s an additional 5,000 USDT prize pool you can unlock when you participate in the Copy Trading Gold&FX Read-to-Earn campaign. This comprehensive guide will help you understand the event, its mechanics and how you can actively participate to maximize your trading potential.

What Is the Bybit Copy Trading Gold&FX Fiesta?

 is a trading event in which participants can diversify their portfolios into gold and forex markets, copy expert traders and compete for 130,000 USDT in rewards.

With seamless integration of crypto-based trading using USDT, and the ability to follow professional traders, this event opens unique opportunities for beginners and experienced traders alike.

How Does Bybit Copy Trading Gold&FX Fiesta Work?

The event is structured to make trading in gold and forex markets accessible and rewarding. Participants can trade using USDT without needing to convert it into fiat currencies, making the process straightforward for crypto enthusiasts. By leveraging Bybit’s Copy Trading feature, users can replicate the strategies of successful Master Traders, gaining exposure to proven techniques.

There are two ways in which you can earn rewards from this event — as a Copy Trading Gold&FX Master Trader, or as a Copy Trading Gold&FX Follower.

To compete as a Copy Trading Gold&FX Master Trader, simply follow the two steps below:

If you’d like to compete as a Copy Trading Gold&FX Follower, simply follow these steps:

The event runs from Jan 24, 2025, 10AM UTC through Feb 24, 2025, 11:59 PM UTC, with rewards distributed on a first-come, first-served basis.

How to Participate in the Bybit Copy Trading Gold&FX Fiesta

Now that you have a better understanding of the campaign, let’s take a look at how you can participate in the Bybit Copy Trading Gold&FX Fiesta and grab a share of the 130,000 USDT prize pool! 

Before you can register for the event, you’ll first need to create a Bybit account. Follow our detailed 

 if you require assistance. If you’d like to participate as a Copy Trading Gold&FX Master Trader, you’ll first need to apply to become one by following this guide.

Participate as a Copy Trading Gold&FX Master Trader

: You will be prompted to log in to your Bybit account. If you don’t already have one, please register for a Bybit account. Once you’ve successfully registered for the event, you’ll see that the 

button is now gray and you’ll be able to see the required tasks in order to win a share of the rewards.

task and complete your first Master Trade.

: Trade at least two lots of gold or forex daily for the duration of the campaign to gain one Lucky Draw chance per day.

Once you’ve accumulated Lucky Draw chances, you can use them to spin the Lucky Draw wheel on the Copy Trading Gold&FX Fiesta page. Simply click the 

button. You can view your available rewards by clicking 

Participate as a Copy Trading Gold&FX Follower

task and a pop-up window will appear. Click 

On the Bybit Copy Trading Gold&FX page, scroll down to view the 

. You can filter all the Master Traders by 

. Look for a Master Trader whom you resonate with, and click on the corresponding 

: Input the amount you’d like to trade, and select the items to copy. Then, check the box once you’ve read the 

[BONUS] Copy Trading Gold&FX Read-to-Earn Campaign

Looking to boost your rewards? Unlock an additional 5,000 USDT prize pool when you participate in the 

Running from Jan 24, 2025, 10AM UTC through Feb 24, 2025, 11:59PM UTC, the Copy Trading Gold&FX Read-to-Earn campaign features five modules and a quiz at the end of the course. Read all five modules and complete the quiz to win a share of the 5,000 USDT prize pool!

Should You Participate in the Bybit Copy Trading Gold&FX Fiesta?

This event is a golden opportunity (pun intended) for traders who want to explore gold and forex markets with minimal effort while enjoying a range of benefits. Here are some compelling reasons to consider joining:

While crypto trading can be highly rewarding, the crypto market is 

. Gold and forex markets offer a level of stability that crypto lacks, making them a great way to hedge risk and create a more balanced portfolio.

One major challenge in gold and forex trading is the complexity of fiat conversions. Bybit simplifies this by allowing users to trade these assets with USDT, eliminating the need for bank transfers or currency conversions.

3. Copy Expert Traders — Instead of Learning from Scratch

Traditional gold and forex trading requires an in-depth understanding of macroeconomic trends, monetary policies and market fluctuations. However, Copy Trading removes this complexity by allowing users to follow and replicate the strategies of successful Master Traders. This is perfect for beginning traders who want to start without spending years mastering market analysis.

With 130,000 USDT in rewards and an additional 5,000 USDT prize pool up for grabs, you can earn daily rewards simply by executing trades. Completing daily trading tasks not only improves your trading experience, but also gives you the chance to win Lucky Draw bonus rewards.

This campaign is designed to be accessible to everyone, whether you’re an experienced trader or completely new to gold and forex. With Copy Trading, all you need to do is select the best Master Trader for you — and let the system handle the rest.

The Bybit Copy Trading Gold&FX Fiesta is more than just a trading event: it’s an opportunity to broaden your horizons, learn from experts and earn rewards. With simple steps to join and a host of benefits, this event is designed to empower traders at every level.

Don’t miss out on your chance to diversify into gold and forex markets and compete for your share of the 130,000 USDT prize pool. Moreover, you can unlock an additional 5,000 USDT prize pool simply by reading five modules and completing a quiz via the Copy Trading Gold&FX Read-to-Earn campaign! 

 — and take the first step toward unlocking new trading opportunities today!

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How to Participate in Bybit Copy Trading Gold&FX Fiesta

Plume Network (PLUME) is a modular Layer 1 blockchain enabling seamless tokenization and compliant integration of RWAs into DeFi.

 (RWAs) are a relatively new area within the blockchain industry. The niche of RWAs has seen some serious growth over the past two years, driven by the expectations of leveraging these assets to connect the worlds of traditional finance (TradFi) and 

 (DeFi). The use of RWAs is currently evolving from pure tokenization into more active applications within the broader crypto finance field. Several RWA-focused blockchain projects have been launched with the aim of putting these assets into active use on DeFi protocols.

Among the new projects in this area is Plume Network, a modular 

 blockchain that aims to create a demand-driven RWA ecosystem. Plume is committed to creating an environment in which physical and digital assets can easily be tokenized, compliance-checked and further used on DeFi platforms for yield generation, lending, borrowing and collateralization. By offering features like streamlined tokenization, smart wallets with advanced RWA management functions and data enrichment from external sources, Plume aims to become a leader in 

 (PLUME) is a modular, secure Layer 1 blockchain designed for streamlined tokenization and applications of RWAs. 

Plume offers the infrastructure to tokenize RWAs, have them automatically checked for compliance and further utilize the assets within DeFi protocols for lending, borrowing, collateralization and other common crypto finance functions.

Plume's tokenization engine, Arc, lets asset owners simplify the process of moving physical and digital assets on-chain. Smart wallets offered by the platform allow these tokenized assets to be further used and managed on external DeFi protocols. Additionally, Plume supports RWAs by integrating external liquidity and data enrichment sources. In short, the platform provides a comprehensive solution for asset owners to manage their RWAs, from moving them on-chain to actively deriving monetary value from their use within the DeFi industry. The project calls this active application of RWAs within the DeFi framework RWAfi, underscoring the tight integration of these assets with the world of crypto finance.

Plume Network launched its testnet in July 2024 after successfully raising $10 million in a seed-funding round. Within eight weeks of its testnet launch, Plume had attracted close to 3.8 million users and processed 265 million transactions.

As of the time of this writing in mid-January 2025, the Plume blockchain continues to operate in testnet mode, with its 

 expected to be launched soon. Plume’s road map for 2024–2025 focuses on the active development of the infrastructural foundations of the platform — its system of 

 and an asset tokenization engine. From 2025 to 2026, the project team plans to expand the platform's ecosystem of RWA classes and yield generation sources. After that, Plume envisions collaborations with TradFi entities to bridge the gap between them and the universe of DeFi.

The Plume project was founded in 2023 in San Francisco, California, by Chris Yin, Teddy Pornprinya and Eugene Shen.

Plume Network users can take advantage of a secure, streamlined process to bring their assets on-chain. Using a network of compliance verification partners, Plume conducts all the necessary regulatory and 

 (AML) checks relevant to each asset type. This optimized verification process gives RWA owners the certainty and confidence that their assets comply with all relevant regulations. Additionally, Plume uses ongoing transaction monitoring to identify suspicious or fraudulent activities related to RWAs to protect its users and the entire ecosystem.

Both physical and digital assets can be tokenized on Plume and converted to composable RWAs. “Composability” implies that the assets can be flexibly used in DeFi protocols without the need to re-tokenize them to fit the format of each individual protocol.

As Plume Network gears up for its mainnet launch and further infrastructure development, its project is in active discussions with several on-ramp and off-ramp providers to help realize its ambition of becoming a leading RWA platform. “On-ramping” refers to the functionality that lets users convert fiat currencies to blockchain-based assets. In contrast, “off-ramping” is the reverse process — the ability to convert crypto assets into fiat currencies for the purpose of taking funds off-chain. Both on-ramping and off-ramping are critical for supporting the tokenization of RWAs, their use within the crypto ecosystem and their possible conversion back to off-chain formats.

With the planned network of on-ramp and off-ramp service providers, Plume will enable its users to achieve greater flexibility in monetizing and managing their RWAs.

Following the tokenization process, Plume ensures that liquidity sources are available to leverage the newly tokenized RWAs. The project has partnered with numerous liquidity providers to help asset owners immediately use their RWAs. These partner liquidity providers allow Plume Network to leverage RWAs for 

Plume’s RWA Chain is the infrastructural backbone of the platform, designed to make the process of RWA tokenization and monetization as effective as possible. The chain is an 

 (EVM)–compatible Layer 1 network, with high levels of modularity and a consensus model — PlumeBFT — designed to optimize high-value, RWA-based transactions. 

Specific details of PlumeBFT have yet to be released by the project team, but its name suggests that it’s a variation of the 

 Byzantine fault tolerant (BFT) consensus model, which typically supports transaction processing and network security even in the presence of some maliciously acting validators. BFT-based models are generally regarded as highly fault-tolerant, a property that’s undoubtedly important when dealing with high-value RWA transactions.

Arc is Plume RWA Chain’s tokenization engine. It’s a full-stack, open-source engine that lets businesses tokenize their assets in full compliance with U.S. securities regulations. Arc features components for tokenization, on-ramping and off-ramping, identity verification, AML monitoring and secondary market trading.

As of January 2025, Plume Network provides early access to developers and asset owners to Arc, with the public release expected later in Q1 2025. In the early-access mode, issuers with yield-bearing assets over $1 million can use Arc for free.

Subject to third-party checks and regulatory approvals, Arc can be used to tokenize diverse assets, including public equities, ETFs, bonds, bank loans, carbon credits, private credit, corporate debt and more.

 that allows asset owners to easily manage their RWAs. It comes with various features, such as built-in compliance monitoring, gasless transactions for certain core operations, and access to around 20 DeFi protocols. As an RWAfi wallet, Plume Passport lets RWA owners directly leverage yield-generation and trading opportunities on partnering DeFi platforms.

Plume Nexus is the platform’s component for enriching on-chain data with information from external sources. Using a group of partnering 

 service providers (Seda, OpenLayer, Supra and Stork), Nexus sources data on financial and economic indicators, social trends and even weather patterns to provide richer insights to users of Plume Network.

Thanks to Nexus, Plume isn’t just a blockchain for tokenizing assets, but also an environment with comprehensive real-time analytics support for RWA users.

Plume USD is the blockchain’s USD-pegged 

, indirectly backed by the market’s two leading stablecoin assets, 

. Users can mint Plume USD by depositing these two stablecoins. Whenever required, they can reclaim their original deposits by converting Plume USD into these well-established stablecoins.

Plume USD is envisioned to support various applications via partnering DeFi platforms. These applications may include earning yield from RWAs, placing wagers within betting protocols, lending and borrowing against RWAs and more.

Nest is a staking protocol on the Plume blockchain that creates yield-earning opportunities for RWA owners. Using Nest, users can earn institutional-grade yields collateralized with RWAs. As of January 2025, the Nest protocol is a work in progress. The first set of yield-bearing vaults is expected to be launched soon.

Plume’s native token, PLUME, was launched on Jan 21, 2025. PLUME supports a variety of functions on the platform, namely:

 cryptocurrency, with a total and maximum supply of 10 billion. Upon launch, 20% of the total supply (2 billion) was released into circulation. The token's supply distribution shares are shown in the chart below.

 scheduled to coincide with its native token launch. In mid-January 2025, users had a four-day time window to register their claims, with PLUME tokens to be distributed upon the crypto’s launch, i.e., starting Jan 21, 2025. An additional 33% boost to the tokens airdropped at the token generation event (TGE) will be available to eligible users during the mainnet launch.

Users who qualify for the TGE airdrop include testnet users with loyalty miles, pre-deposit stakers and user communities of several partner DeFi platforms — Polymarket, 

 (ONDO), World Liberty Financial (WLFI), 

 (AIXBT) and some users of Backed Assets, Dinari and Swarm X.

The PLUME token is available on Bybit’s Spot market as a 

 stablecoin. You can also take advantage of the 

 campaign to grab a share of the 40 million PLUME prize pool.

Under the terms of the campaign, new users who complete basic identity verification can earn PLUME rewards by accumulating a deposit volume of at least 3,000 PLUME, or by depositing 100 USDT and trading 100 USDT worth of PLUME via their first trade with Bybit. Existing users can also qualify for rewards by trading at least 500 USDT worth of PLUME on Bybit’s Spot market. The campaign is valid through Feb 3, 2025, 9 AM UTC.

By streamlining the tokenization of diverse real-world assets (RWAs) and building a network of financial infrastructure partners, Plume Network is creating an inclusive financial ecosystem for RWA issuers and traders. The demand-driven integration of RWAs will undoubtedly lead to rapid adoption of these assets within the crypto industry.

Plume’s ecosystem isn't just a blockchain to tokenize RWAs — it's a comprehensive environment with compliance providers, liquidity partners and a versatile tokenization engine. With all these features on offer, Plume is gearing up to become a leading blockchain RWA enabler. Following the recent launch of the PLUME token, all eyes are now on the project's imminent mainnet debut.

Intermediate

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Plume Network (PLUME): Building a Demand-Driven RWA Ecosystem

Crypto

web3

CryptoPunks are digital collectibles traded as a NFT. And a punk was sold for a whopping $7.58 million. So, should you invest in it?

CryptoPunks.jpg

CryptoPunks are digital collectibles traded as 

 within the Ethereum network. The introduction of CryptoPunks drives the development of the ERC-721 tokens. CryptoPunks are made up of 10,000 unique characters and features focusing on the 8-bit-style punks.

As one of the first NFT projects in the Ethereum network, despite the lack of utility of these virtual characters, sellers still made immense profits by trading CryptoPunks. But, how exactly is that achieved?

To give an answer to this question, you should first know the origins of CryptoPunks, how they work, and what contributes to their value.

 in 2017 in New York by Canadian software developers — Matt Hall and John Watkinson. Among the 10,000 digitally pixelated characters of which 6,039 are male and 3,840 female. The rest of the “punks” are aliens, zombies, or even apes. CryptoPunks has made sure that each of these images is unique, despite sharing some attributes with one another. 

Initially, these NFTs were free for everyone, with only gas fees needed in order to acquire them. But, 1,000 punks were claimed by Larva Labs. These punks claimed by the developers are known as Dev Punks. 

With the rise in popularity of the NFT concept, CryptoPunks started receiving more attention. People started to bid on different punks, assigning to them value as never before. By 2018, some of the most expensive punks of the CryptoPunks network were priced around $5,000.

Surprisingly enough, these NFTs kept growing in value. As of March 11, 2021, the largest sale of a CryptoPunk was for 

 at an unbelievable price of $7.58 million. The second-largest sale took place the very same day for the acquisition of 

, which sold for $7.57 million. And the third-largest sale of a CryptoPunk NFT occurred on April 27 of the same year, at a price of $1.76 million for the acquisition of 

Top 12 most expensive CryptoPunk sales in USD. Source:

When the CryptoPunks project was first released, NFTs were not yet exactly NFTs. The ERC-721 token standard was not yet in existence. Therefore, the initial art collectibles were considered 

 at first. Once the ERC-721 token protocol was established, they were labeled as ERC-721 tokens.

ERC-721 is the backbone of non-fungible tokens. Non-fungibility technically means that such tokens are irreplaceable. Each token is completely unique and cannot be replicated, unlike, for example, ETH tokens.

NFTs such as CryptoPunks followed after the introduction of CryptoKitties. Because of the uniqueness of NFT tokens, demand usually exceeds supply, causing the prices of such ERC-721 tokens to increase in value.

Since a blockchain is unable to store images, the hash reference of each image is stored. Each hash is unique, representing a specific CryptoPunk. The metadata of the token contract provides information on which one of the 10,000 punks you own. 

But, what makes these punks unique is the virtual attributes they possess. Each one may be wearing a beanie, pilot helmet, hoodie, or 3D Glasses. To illustrate, 54 of the 10,000 wear at least a pilot helmet and 44 of the 10,000 wear a beanie. Punks can have up to seven attributes, but only one punk in 10,000 is known to have all seven (punk #8348).

There are also eight punks out of the 10,000 with no attributes at all. For instance, punk #6487, which also sold for $1.05 million and is the eighth-highest CryptoPunk sale of all time, has none of the attributes at all. The majority of other punks have three attributes — to be precise, 4,501 of them.

CryptoPunks based on attribute count. Source:

You can also “wrap” CryptoPunks. This process requires that you use wrapped contracts, whereby you wrap your punks and keep them in custody. Doing so can earn you an ERC-721 token that can be used for trading or 

 purposes. You can unwrap your token whenever you want. 

Another way of selling punk tokens is through auctions, where the highest bidder buys your punk.

If there is a blue background, the punk is not for sale. A red background indicates that the punk’s owner has a fixed price, and a purple background indicates that an active bid has been placed.

While the purchase of CryptoPunks might seem a little complicated at first, it is actually very easy.

There are various factors that determine the price of an NFT. Here are the ones needed to consider when valuing CryptoPunks:

There are only 10,000 CryptoPunks available, and each of them is unique. This makes CryptoPunks extremely scarce. As the popularity of NFTs grows, the demand for such tokens increases and exceeds the supply, causing a shortage of CryptoPunks.

A shortage is usually followed by increases in the price so that a new equilibrium is reached. Since the likelihood for inflation is low, you should always keep in mind that the value of CryptoPunks may keep increasing.

The specific type of NFT plays a role in the estimated value of CryptoPunks. There are several NFT types, including in-game items, real-world tokenized items such as documents, virtual real estate, and collectibles. Some NFT types have a higher demand than others. Since CryptoPunks are collectibles, one of the most popular ERC-721 tokens, they are more likely to have a prominent value.

Rarity is also one key element in the value of CryptoPunks. It is directly related to the limited supply factor, but it is also based on the attributes and the particular type of punk. To illustrate, alien punks are generally more expensive because they are very rare. There are only nine alien punks out of all 10,000 punks available. So when valuing a CryptoPunk, you should also check on its rarity.

CryptoPunks were free when they were first released. Some investors took advantage of this situation and got a hold of a lot of CryptoPunks from the get-go.

However, the problem is that some of these CryptoPunk whales have not been active for a long time. And might not be aware of the current value, hence, selling them for a much lower price (which would have been relatively high three years ago). This could cause an imbalance in the supply-and-demand equilibrium by potentially decreasing the value of these collectibles.

So when valuing digital art, keep in mind that there may be whale owners who can disrupt the normal price of a punk, intentionally or otherwise.

The liquidity of tokens is one of the most important factors worth considering when it comes to investments. Usually, when the price of a token increases significantly, its liquidity becomes much lower. This is not only the case with NFTs but also fungible tokens. 

WIth fungible tokens, transactions become very inefficient. Liquidity for NFTs is important, especially for the long term, because you might have to convert your ERC-721 tokens into ERC-20 tokens. This is done by depositing your NFTs to a liquidity pool. So you should also be aware of the liquidity of your CryptoPunks collection, especially for the future.

If you do not want to go through each value determinant one by one, but rather obtain an estimated value for a CryptoPunk immediately, you can use online NFT value estimators. These websites consider all of the aforementioned factors and provide you an estimated value for a specific NFT token.

 is one of the best NFT value estimators for digital art. All you have to do is paste in the URL or the NFT ID of a CryptoPunk, and DappRadar will provide you with an estimated value.

The rise of NFTs has made collectibles such as CryptoPunks one of the best ways to make big profits. Even though a CryptoPunk might be very expensive, the return on your investment is likely to make it all worth it. This has been the case for CryptoPunks so far and may keep going this way in the following years as well. We are just at the beginning of the NFT era.

What Exactly Are CryptoPunks and Why Should You Care?

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