The Science
Of all the narratives around NFTs, speculation is the one that most needs to be told honestly, because it is also the collection's clearest risk. "Number-go-up" is often dismissed as wishful thinking, but momentum—the tendency of assets that have risen to keep rising for a time—is one of the most replicated empirical regularities in finance. Jegadeesh and Titman (1993, Journal of Finance) showed that buying past winners and selling past losers, ranked purely on trailing 3-to-12-month returns, generated abnormal profits of roughly 1% per month, with the strongest configuration (12-month look-back, 3-month hold) near 1.31% per month, on the order of 12% annualized; they tested 16 formation-and-holding combinations, and every one delivered positive returns. Past price carries information about near-term future price. That is the documented core of momentum—and, just as importantly, its limits are documented too.
The effect is not a fragile, data-mined artifact. Geczy and Samonov (2016, Financial Analysts Journal) ran momentum across U.S. securities from 1801 to 2012—212 years—and found it positive and statistically significant out of sample, decades before anyone named it. Asness, Moskowitz and Pedersen (2013, Journal of Finance) showed momentum profits appear across equities, bonds, currencies, and commodities on four continents. An effect that survives two centuries and every asset class is a real feature of how crowds price things. But note what momentum is not: it is not a guarantee; it is a tendency measured on average across many periods, and the same body of research documents sharp reversals—"momentum crashes"—when trends break.
Behavioral finance explains the mechanism, and the explanation is double-edged. De Long, Shleifer, Summers and Waldmann (1990, Journal of Finance) formalized positive-feedback trading: when some traders buy because prices are rising, it can become rational for others to buy ahead of that demand, amplifying the move. Their title is worth quoting exactly—"Positive Feedback Investment Strategies and Destabilizing Rational Speculation." The same feedback that drives prices up drives them down: rising prices manufacture demand, and falling prices manufacture selling. Positive-feedback dynamics are the documented micro-foundation both of great asset re-ratings and of bubbles that later deflate. Any honest account of speculation has to hold both halves at once.
The NFT-specific evidence is striking. Nadini et al. (2021, Scientific Reports) analyzed 6.1 million trades of 4.7 million NFTs (about $935M in volume) and found that the median sale price of an NFT's collection predicts more than half the variance of future sale prices, with R² reaching 0.60—while visual features and trader-network position together explained only about 0.18–0.25. In NFTs, price action has been a stronger predictor than the artwork itself. Amihud and Mendelson (1986, Journal of Financial Economics) add a second force: an asset's expected return is a function of its trading frictions, so as an asset becomes more liquid and more traded, its liquidity discount narrows. Trading occasions—set-completion across decade, country, and topic traits—can make a collectible more liquid. These are real dynamics; they are also symmetric, which is why they belong in a discussion of risk as much as of value.
The returns on record are large, and so is the volatility behind them. Kong and Lin (2021, working paper, University of Hong Kong) found average monthly NFT returns ranging from 6.10% to 44.11%, with risk-adjusted Sharpe ratios comparable to the NASDAQ—but those averages sit on top of extreme dispersion, and individual collections have drawn down 70–80% or more from their peaks. Pénasse and Renneboog's study of the art market is titled "Speculative Trading and Bubbles"; it documents that extrapolative, attention-fueled expectations produce measurable price persistence and, by the same token, bubbles that correct. Dimson and Spaenjers (2011–2014) found "emotional assets" compound over long horizons at modest real rates—art around 2.4%, stamps 2.8%, wine 5.3% real annually from 1900 to 2012—a useful anchor against short-term extrapolation. The honest reading is that speculation is a genuine, studied force: it can lift a scarce, culturally legible asset, and it can just as readily reverse. Meme-orial makes no promise about the direction of price.
The historical parallels illustrate the mechanism in both directions. CryptoPunks, given away free in 2017 and largely ignored, later re-rated through momentum and positive-feedback buying—and then experienced steep drawdowns before partially recovering, exactly the volatility this literature predicts (Oh et al., 2023, North American Journal of Economics and Finance). The postwar art market shows the same extrapolative momentum playing out over years in an illiquid, high-friction venue; on-chain markets run the identical dynamic faster and around the clock, which cuts both ways—faster appreciation and faster correction. What Meme-orial can honestly claim is structural, not directional: a closed set of 104 culturally legible monuments, with a transparent on-chain price history that every buyer can see. That transparency is the point. Where most projects bury the volatility, an honest account states it plainly—momentum is real, speculation is the primary risk in this asset class, and no one should treat a scarce collectible as a guaranteed appreciating asset.
Key Findings
- Momentum is real but bidirectional (Jegadeesh & Titman 1993; Geczy & Samonov 2016). The winners-keep-winning effect measured near 1.31%/month and survived 212 years and every asset class—yet it is a tendency, not a guarantee, and the same research documents sharp momentum crashes when trends reverse.
- Price has been the dominant NFT signal (Nadini et al. 2021, R²=0.60). A collection's past price predicted more than half the variance of future prices—two to three times more than visual features—on a public ledger where price history is visible by default. That signal points down as readily as up.
- Positive feedback is destabilizing (De Long, Shleifer, Summers & Waldmann 1990). The same bandwagon dynamic that lifts prices amplifies declines; the authors named it "destabilizing rational speculation," and it is the micro-foundation of bubbles that later deflate.
- Liquidity is a two-way price factor (Amihud & Mendelson 1986). Trading occasions—decade/country/topic micro-markets—can narrow an illiquidity discount, but thinner trading in a downturn can widen it again.
- Attention drives bubbles as well as run-ups (Pénasse & Renneboog). Extrapolative, attention-fueled expectations produce measurable price persistence and, by the same mechanism, corrections—the paper is explicitly about bubbles.
- High returns come with high volatility (Kong & Lin 2021). Measured monthly NFT returns ranged from 6.10% to 44.11% with NASDAQ-comparable Sharpe ratios, but on top of extreme dispersion and drawdowns of 70–80% or more; long-run "emotional asset" real returns (Dimson & Spaenjers) are far more modest.
Why This Matters for Meme-orial
Speculation is the one narrative Meme-orial treats as a risk to disclose rather than a promise to make. The momentum literature is unusually deep—lab behavioral finance, 212 years of cross-asset evidence, formal asset-pricing theory, and native on-chain data all agree that price carries information about future price, and that in NFTs specifically it has been the dominant signal (Nadini et al. 2021, R²=0.60). But every one of those forces is symmetric: positive-feedback trading (De Long et al. 1990) and attention-driven extrapolation (Pénasse & Renneboog) amplify declines as surely as advances, and NFT collections have drawn down 70–80% or more. The design rationale here is honesty, not encouragement. Meme-orial's fixed 104-item supply and transparent, on-chain price history make the collection's trading dynamics fully legible—including their volatility. A scarce, culturally legible collectible can attract speculative attention; it can also lose value quickly. Anyone engaging with the collection should treat it as a volatile cultural asset, not a guaranteed store or grower of value. Stating that plainly is the credible position.