*This is not financial advice. This is merely an observation of what is currently working for NFT investors. Always DYOR and participate at your own risk.*
Picture this: it’s late summer of 2021 and you just minted some derpy looking farm animal jpeg for $200. The Discord mods have posted 30 Twitter raids in the last 6 hours and you’ve participated in every single one of them. The community is banding together to push up the floor price, and that picture is now worth $2,000. You sell. It feels wonderful: your first 10x! You need more. You keep minting new projects but it just isn’t the same. Half of them are rugs, and the other half only do a 2-3x max. You hold everything hoping that the big gains will return, but most of them fizzle out and head to 0.
March of 2022 comes around and you finally get whitelist to a hyped project. You mint for .1 ETH and then go about your day. 6 hours later, you check back on the OpenSea and the floor is .06 ETH, the project only sold 50% of their supply, and the founders haven’t posted an announcement since the mint started. But fear not! Holders will be rewarded right? Nope. They rugged.
Where have the days gone where that 10x felt easy? Hell, we’d even settle for that 2-3x that we scoffed at all winter. Unfortunately, that was a euphoric NFT bull run, and that bubble has at least somewhat popped. The people who were in NFTs early learned the best tactics for flipping, and suddenly the NFT space became a battleground rather than a community. Everyone is now trying to outsmart each other, rather than working together to drive up their investment value. New people coming into the space were advertised “life-changing profits” and instead are met with rapid losses.
On top of that, the whitelist meta has contributed to plummeting secondary volume. More people now wait to see an indication of success before buying a project, rather than blindly minting and trusting the community or team to drive up the floor. The days of a project selling out @ .1 ETH mint price are pretty much gone. Even the most hyped projects struggle to mint out or hold a floor. This has crushed the sentiment of NFT investors to the point where “paper hands” are a norm. It is very common for people to mint at .05 ETH and list for .06 ETH immediately. In this instance, secondary buyers see a project that is dying on the vine and turn away from it. Welcome to the bear market.
Are NFTs dead?
It won’t take long until many people have given up entirely on the NFT space. But public sentiment isn’t the only determinant of value. Bear markets are normal, and extreme fear during them is common. We are seeing many people bail out as the opportunities for “easy money” have passed by. But this doesn’t mean that NFTs are dead – it means that investors are becoming more reasonable… for now.
Luckily for everyone still here, you’re setting yourself up for another potential boom when the inevitable crypto bull run returns. It may take quite a bit of patience, but if you stick around, you’ll be the first in line when NFTs start heating back up. So what can you do in the meantime? There are plenty of ways to make money in a bear market.
How do I make money?
Some may see it as a curse, but for the short term investor, it can be a blessing: the free mint meta. As hyped projects began dying left and right, and selling out became an impossible task, the free mint meta was born. In case it’s not abundantly clear, a free mint is when a project just says “screw it” and gives their entire collection away for free. This has opened the door for a wave of new projects to start launching with the promotional strategy being: “it’s FREE”.
I said that some people may see it as a curse for a reason: free mints have caused a lot of trouble in the NFT space. The biggest issues with the free mint meta are.
1. SCAMS. This meta has opened the door for a flurry of scammers to capitalize on impulsive free minters. The most common method is to build a community around a “free mint”, and then launch a contract that drains their wallet on mint day. Luckily, the general NFT space has become keen on the risks, and is getting gradually better at avoiding scams. The two best solutions to this issue are: 1. Using a burner wallet when minting and 2. Checking the Metamask display to ensure the contract appears as it should (usually with the word “mint” rather than “set approval”).
2. Rug pulls. With a free mint, project founders have become less likely to dox before mint, and thus more likely to rug their project if it doesn’t go as planned. Since everyone mints for free, the damage is much less than if it were a paid mint. But rug pulls are still one of the most infuriating experiences in NFTs, and the free mint meta has made them more common.
3. The death of development. For the majority of projects, a decent-sized budget is needed to build out utility, manage aspects of the project, and maintain a community. With 0 funds from mints, it is nearly impossible for a normal team to build a project beyond mint. For this reason, projects will launch with a vision in mind, and then slowly fade away from that vision due to lack of funding. I have minted countless NFTs whose founders had to openly abandon the project after a short period because they couldn’t motivate their team to keep building. Successful projects need money.
Jeez, that last section was depressing. Where’s the good stuff? Well, here are the pros of the free mint metaBRO, IT’S FREE. Oh, right! With a free mint, the most you’ll lose from investing is the gas fee, which is typically less than $10 (and often less than $5). This is a huge opportunity to spread a small amount of funds across dozens of different opportunities in hopes that one of them will hit.
In my case, this strategy has worked out well over the last few months. I’ve minted a handful of rug pulls or flopped projects, but in total that has only cost around $50 total in gas. On the flip side, I minted some great free projects that made over 10x gains: a few of them went to .05 ETH, one went to .2 ETH, and one went to .4 ETH after minting for just .005 ETH in gas (an 80x gain)! The few hits can heavily offset the misses, as long as the misses have minimal costs associated with them.
That’s pretty much it. In terms of development, it still seems fairly uncommon for a project to continue its success after mint, even if there’s a big initial spike in floor (the .4 ETH floor NFT that I mentioned earlier is now worth .02 ETH). The best strategy is to just flip it quickly and move on; never hold out for higher gains or wait and see if you reveal a rare. Profit is profit; take it while it’s there.
Join Alpha Groups
I’m a huge proponent of alpha groups for two main reasons: following calls, and getting whitelist spots. Both of these perks have massive potential for making big gains even during the worst market conditions.
1. Following calls. Many alpha callers have a skillset beyond what the average trader possesses. They can often accurately gauge the strength of new projects based on in-depth research, familiar trends, or inside knowledge. They also tend to use NFT trading tools to evaluate the projects they’re looking at, including some paid tools with advanced analysis. These can give them a big leg up on fellow degens, and they will happily pass that knowledge on to their community. Not every call will be a home run, but the wins can usually outweigh the losses.
2. Whitelist spots. My favorite part of alpha groups are the whitelist spots that they offer. They typically have members committed to setting up whitelist collabs, and this sometimes includes hyped projects. Not every whitelist that they offer up is going to be a winner, but you might as well guarantee yourself access just in case. Once you’re in a group, you’ll be able to enter daily giveaways to various new projects. Some of these will be a free mint that can be flipped for small gains, while others may be paid mints that do a quick 5x. Sure, you’ll come across some rugs or projects that will flop, but that’s just part of the game. Learn to recognize which ones are worthwhile, and you’ll have the key to making consistent profits during these bearish times.
To join an alpha group, you’ll have to do a bit of leg work. Some groups require a paid entry, a yearly subscription, or some powerful connections. The best way to get access is by doing some networking. Ask around in various NFT communities and you might just get lucky enough to get a free invite. If not, consider making a small investment to gain entry to some reputable alpha groups.
Just Wait… But Stick Around
The easiest way to make money in NFTs requires no action from you: just wait for the next bull run. Nobody knows when that will be, but if you believe in the technology, you should be expecting a resurgence of NFTs in the future. Many people have invested time and money in this space, and the possibilities for innovation remain mostly untapped.
Here are a few things you can be doing to set yourself up for the next NFT bull market:
1. Buy the dip. I’m sure you’ve heard this one before, and I’m sure it’s gotten you in trouble a few times. However, buying the dip for “blue chip” investments is historically the best method for making long term gains. The same can go for NFTs, as long as you believe in the vision of the projects that you invest in. Sweeping the floor of some random degen free mint probably won’t pay off in the long run, but buying the dip of a top 10 NFT project could deliver massive gains in the future. This usually requires a larger initial investment, but tends to be a lower risk & higher reward. Just be prepared to hold out for the next bull run before making any profits.
2. Invest in teams. Coinciding with the previous point, make sure that you are investing in capable teams. Typically, these exist within “blue chip” communities, however there may be some solid teams developing hidden gems at cheap entry points. The key is to look at how the founders plan to progress the project and prepare for the future. If they have big goals in mind and a history of successes, they could be building the next big winner for when a new bull market rolls around.
3. Stay informed. If you don’t plan on buying anything during this bear market, you should at least be keeping current with the latest trends. Follow the space carefully, and continue building your knowledge of NFT trading. Research potential innovations, and follow high profile projects carefully to see what they’re doing right. When it comes time to jump back into the space at the start of a new bull run, you will be equipped with significantly more skills to find easier success.
Admittedly, right now is not the best time to invest in NFTs for the purpose of making quick money. A bear market requires strong attention to detail and extreme patience. If none of the aforementioned methods feel right for you, then you should maybe wait on the sidelines until the market shows signs of improvement. But don’t stray too far – the next bull run could be your greatest chance at finding your NFT success story.