Let’s explore different strategies when investing in NFTs.
This is not investment advice, I have NO clue how the future will pan out, I’m just going to highlight some strategies that have worked for me.
Investing in the token.
This is easy, I usually buy a good chunk of the fungible token representing the projects I believe in. So MANA for Decentraland, GAME for Game Credits, SAND for Sandbox, RARI for Rarible, etc.
Tokens are the language of broader crypto so usually are the first to pump when there’s big announcements, listing or as the project grows. This is the general nature of crypto.
I personally like it when NFT projects have a representative fungible token, that way I can invest easily and can benefit from the high liquidity when there’s good news.
With NFTs we have to break them down into,
Collectibles are mainly a buy and hold. Think Art, where each artists style is different and generates their own set of collectors who mainly buy and hold an artists art as the artist becomes more popular.
Also Cards, mystic Axies, Cryptopunks, founder cryptokitties, etc which don’t really do anything other than sit in your wallet and (hopefully), appreciate in value.
With this, I make sure I see user base growth or at least a huge community that give value to them. Collectibles only have value if a community give them value.
As there’s no real ‘intrinsic’ value in the sense not much, if anything can be done with them.
So I make sure the community is solid, and is growing. Usually this takes time to establish.
For example, cryptopunks and cryptokitties were slowly appreciating until recently where they went nuts.
The community had time to establish and recognise them as true OGs.
so for me and collectibles, it’s about which NFT projects have a strong community that have been at it for 6-12 months in giving value to the project.
Once I know which these are, I’ll try get in and make my purchase.
Like Axie Infinity, where I purchased these 12 Axies at 3-3.5ETH each, (they’re mystics), at the time the floor price was around 3 ETH.
Now the floor price is 5, almost 6 ETH.
But I had known and followed the projects for 2+ years, seen people always excited and continue to see the user base growth.
So it was a no brainer that they’d continue to go up in value.
This also has a chance of appreciating depending on which type of NFT it is.
For example, tickets or access NFTs that are only redeemable once off will be used and discarded.
But LAND NFTs that you need to buy to have build permissions on, or even ENS domains where you can buy .crypto or .eth domain names to use, appreciate as more people use them.
Similar concept to collectibles but not JUST a buy and hold.
It’s a buy, use, grow the ecosystem by the community collectively providing valye and thus the price will growth.
For example, this Crypto Valley district has seen Binance, Matic, Game Credits, etc deploy HQ’s here and thus the land around it has increased in value!
So as the ecosystem grows, the NFTs will growth. In this case, you’d need to be well versed on what’s going on, what’s about to drop where, which areas are gaining momentum, etc.
In most of these cases I rarely buy on the market, I’ve mostly reached out and negotiated to get a better buy in price.
Usually, I go for bulk buys, that way whales can find that liquidity to cash out and you can get a good deal that has a buffer if things go sour.
I have some case studies here if you want to go through my techniques.
I’ve also done a lot of OTC deals. Which means dealing direct with the buyer/seller.
Or at least made a handshake agreement which can then be executed on OpenSea or the platform.
My blog and twitter have been integral to making this happen. As people reach out to me with their investments and I’ve been able to keep in touch and at some point they’ll buy or sell.
It also allows me to get a sniff of early projects as new founders reach out to run ideas past or to get my opinion.
I also check the trading channels on discord, telegram or reddit to see who’s posted what.
The more opportunities on trading, investing, reaching out you can open up for yourself the better you’ll do.