*Nothing stated in this article is financial advice. Always do your own research before buying any high-risk assets like crypto or NFTs*
OUCH. With Crypto prices tumbling to their lowest levels since 2020, investors are
losing hope in the NFT market. The bubble has finally burst for many communities built
on “vibes” and “Diamond Hands” as floors fall out on nearly every NFT project.
So, what do we do? Pack up and leave? Double down? Before you go making any rash
decisions, consider the risk vs reward when investing money in the NFT market in the
near future.
Don’t
I can tell you what not to do: don’t panic sell your most valuable assets at the bottom. Some (probably not all) will likely recover. The projects that have always maintained a long-term vision and have stuck by their communities through thick and thin have the best shot at survival. The “blue chip” projects with established partnerships extending beyond web3 have an even better chance. The big PFP projects that everyone has always recognized: BAYC, CryptoPunks, Doodles, Cool Cats, etc. all have a good chance of holding onto their communities and weathering the storm.
On the other side of things: don’t ape into dead projects. Dumping all your money into collections with < .001 ETH floors will not make you rich, even when the market comes back. A rug’s resurrection is highly unlikely. Also, stay away from the projects that are hanging on by a thread. You will need to accept that a large portion of collections simply won’t survive this downturn. Unfortunately, founders will lose hold of their communities amidst the panic, and new communities will never form.
Do
Instead, find those projects with a committed team. This isn’t always easy, as some leaders will throw out weekly announcements saying that they’re “still building”, or commending their supporters for being “the best community” while 2 people say “gm” in their general chat. Look for leaders who have always had a concrete long-term vison while providing detailed updates on their progress. The most promising candidates are those who intend on delivering unique technology. Games, Metaverse capabilities, and DAOs are a good start, but the projects that are creating something never-been-done-before could see the best overall gains.
Alternatively, if your funds permit, use this opportunity to gain entry into some “blue chip” projects. Of course, make sure the general sentiment around the project is still overall positive. Even better if it is project that has massive utility in development. For example, FLUF World is currently working to build an open Metaverse, and has been landing massive new partnerships every month of 2022. The entry into a project like this may never be better. But as always, prepare for the worst. Only invest funds that you are prepared to lose.
The best way to find an entry point into new projects is to watch a handful of them closely over an extended period of time. Understand what is causing spikes and dips in their floor price. Token drops, prominent whitelist giveaways, or free airdrops can lead to short term boosts in volume – this is probably not the best time to buy, because it is driven by hype. If a project’s floor drops for seemingly no reason, it may be caused by people starting to panic out of the market. This is a better time to buy, especially if the project is attractive for the long term.
NFTs that I’m Bullish On
*Again, this is not financial advice.*
1. Established “blue chips”
Duh. That’s why they’re called “blue chips” right? Despite the high entry price, these remain the best bet for long term value. For example, any NFT in the BAYC ecosystem will likely be the first to regain momentum if a bull market were to return. If you were to invest significant funds into NFTs, these types of projects would be the lowest risk.
2. Metaverse projects
We still don’t have much clarity on the future of the Metaverse, but I believe huge strides will be made in the near future. We experienced a quick pump earlier this year in collections like Sandbox and Decentraland, but never really got a similar pump after BAYC’s Otherside drop. I believe this sector of crypto and NFTs will quickly regain traction when the market turns back around. Web2 companies have already begun investing in the Metaverse, so keep an eye on any reputable projects that are focusing on digital experiences.
3. Well-funded projects with strong teams
By well-funded, I mean projects that have raked in millions of dollars from their launch, secondary sales, and secondary collections. In this space, money can buy you a LOT in terms of product development & marketing. A financially stable project should capture every opportunity to create ambitious long-term goals and achieve them, regardless of market fluctuations. To be safe, you should also ensure that they are led by a trusted and capable team. Plenty of projects rode a bull market hype-train to acquire massive funding at launch, but have since demonstrated that they’re not willing to invest the money back into the business. Avoid these at all cost. Make sure the team is actively showing progress & generating consistent value for their community.
If you seek out projects with any of these qualities, you have a good shot at making solid long-term gains. Any project that has all three is a no-brainer, in my opinion. For any investors who are ready and willing, now may be the perfect time to buy into longterm blue-chip projects that are building for the future. All we can do is wait and see. Invest wisely my friends.
