Today is the day of the historic Christie's auction of a lot of 9 "Dev" CryptoPunks (these are CryptoPunks that were kept by the artists when minted).
The star of the lot is Punk 635, one of the 9 ultra-rare Aliens
So what does our valuation model say about this lot? The model is producing a price of 4,255 ETH ($16.74M) for the lot, of which the model is attributing (correctly we believe) 94% of the value to the Alien.
Christie's has an estimate of $7M to $9M and "whisper prices" in the CryptoPunk community are that it is impossible to be competitive as a bidder below $20M, even before the recent ETH runup.
What do we think? Well, this is a perfect example of the power and limits of models based on actual data. Our model can only see transactions that have already happened and there has not been an Alien sale since March (4,200ETH). Based on "what has already happened", the model is fair.
It is quite likely though that the Christie's auction will substantially exceed both the Christie's estimate and the model prediction. Since the the last alien transaction, CryptoPunks have become much more visible and the Christie's auction will reset visibility even further up. High prestige auctions like this can also create very interesting bidding dynamics from actors who have various objectives, that could drive the price up much much further.
So our prediction is that the auction will exceed our estimates and any automated model will always fail to capture highly unique circumstances for hyper-rare NFTs.
The other difficult question for us is how to record the auction sale price in our database, since it will be one price for the whole lot. The starting point for our approach would be to distribute the price based on our current relative values for each punk (e.g. 94% to the Alien and so on). This might be fair in any reasonable scenario - say $15M to $25M - but if the auction spirals upward, it probably has more to do with the value of the Alien than a general reset in prices with all CryptoPunks.
We will share with you what we decided to do, once the auction happens.
Happy Auction Watching today, we are looking forward to it!