TS7 | NFT Investing Strategies

First people seemed to be making millions on NFTs. Now they seem to be losing their shirt. What strategies can one follow to try and build wealth via NFTs?

Discussion Topics: NFT Investing Strategies

• Types of investors
• Strategies for being a Flipper
• Advantages of being a Holder

Transcript: NFT Investing Strategies

Hi, everyone, welcome back to The Token Singaporean, thank you for tuning in. So for today, we are going to talk a little bit more about how we can effectively participate in the NFT space, specifically as an investor. In general, I think that the easiest way to get yourself involved in this space other than just being an onlooker, and just observing by the sidelines, is to simply be an investor, because in a way, you do not need to know a lot of like, in depth knowledge as yet, you just need maybe a small startup amount, and you can easily find projects to get into, and to buy the NFT project and getting yourself invested, since you have skin in the game, it gives you a little bit more motivation to read up more on the different aspects of what you need to know. And usually, I find personally that that was how I grew a lot in terms of my understanding and knowledge in this space. It’s really through reading and also interacting with the communities that I’m invested in.

So I think that this episode should be pretty relevant to most of us. And I just want to share a little bit more, especially for those who are going into this new and kind of just want to figure out what kind of strategies are there, what kind of investors are there specifically for the NFT space. So as a beginner, if we look at the first layer of things, I would say that there are two main types of investors you can find or categorise in the NFT space. The first one are the flippers, and the second one, are the holders. So we’re going to talk a little bit more about the difference between these two investment strategies, and some of the things that you have to look out for if you plan to go into the NFT space as a flipper or as an investor, respectively.

So let us begin by talking a little bit more about what it means to be a flipper. From my understanding, if you’re a flipper, it means that you are buying and selling within a very short timeframe. So it’s quick in and quick out, very much like day trading. So this strategy is good for people who are starting with just a very small amount of eth, and want to gradually fill their bags. And it’s good because in general, the idea is that you don’t really get your liquidity stuck with one NFT, you just go in, take a quick profit, come out with a bigger bag, and then you can reinvest for more. And typically, the way to obtain optimal gains would be to get into a whitelist of projects mint and sell it before review, because pre review is usually when price reflects the hype of the project, plus a speculative aspect of potentially getting a rare piece. So it would probably be a good time to sell before being revealed. And because of this, we are usually looking at mint. So naturally, for flippers, the startup cost is usually smaller. And that’s why I say it’s good for people who have just a very small amount of eth, you don’t have larger amounts to invest in mid tier projects. So it’d be good for you to look into this strategy.

So in terms of duration, usually, I would think one trade would happen between a span of a few hours to a few days, depending on your TP, which is your Take Profit Point, and your risk appetite. So the advantage is that you’re trading based on a speculated price, so you don’t really bear the risk of the long term potential of the project. You’re just buying at the cheapest price selling at a high price because of the hype and you’re done. So in terms of the future, whether the project actually does what it promised in their roadmap of stuff is not really any of your business. You’re just in quick, making a quick buck and getting out.

However, by doing this, I think the main disadvantage is also that you might lose the opportunity to capture exponential gains, if the project develops and do well in the future. So if you’re looking to be a flipper, usually, I mean, in most cases, especially if you are minting, in a normal market condition, we’re not talking about extreme hype conditions, you’re looking at maybe 2 to 3x, on average. So if you bought it for 0.05, ethereum, you can look to sell for .15, .2, or more or less there, but sometimes during like, extremely hype market conditions, or if a project is extremely hyped, you can see yourself basically minting for like, zero point something and immediately selling for a couple of eths. So it really depends on the kind of project you get into. And if you’re lucky enough to get into one that is very, very hype. But the point is that a lot of projects need time to build before they can reach to their full potential, and go up to 10 eth and above that kind of value. So if you are a flipper, you are likely to just forgo all these potential benefits, I mean, potential profits, and just go for quick short gains.

So I think the best way for flippers is to make money or rather, the best conditions when flippers can make the most money is usually when the market is very, very bullish. And we see a lot of projects selling out. So I would say, in my opinion, when I plan to flip a project, my minimum criteria would be that I have to expect that the project will be able to sell out so that people will start buying from the secondary marketplace, which means to buy from owners like me. So if I don’t foresee that the project will sell out, it is unlikely that I will be able to sell at a higher cost prior to review. So personally, as well, usually when I want to mint a project to flip, what I would do is that when presale starts, I would first observe holders and volume numbers during the presale period, I can see all these numbers through the OpenSea page. So if I’m unsure about whether it will sell out, I usually will not mint yet. And it’s perfectly fine. Because if you’re in a presale, just make sure that you mint within a given window, you’re most of the time fine. Although there are cases like ultra high projects, where whitelists are like over allocated, maybe sometimes they’re just barely managed. So they’re over allocated. And in the end, not everyone who got whitelisted got to mint. But I think as long as you are constantly watching the numbers, you shouldn’t miss out on the mint eventually. So for example, for myself, I would usually watch the numbers. And when the numbers get to about 70 to 80% minted out, that’s when I would decide, okay, I probably can start minting because then the project is likely to sell out once it reaches that stage.

However, if we are in a bear market, I think it is very difficult to go with this strategy, because during this period, almost no projects were mint out, even the ultra hyped ones. So the most important skill here I think, is to be able to ebb and flow with the market movement. And there are some useful tools you can use to track activities of various projects such as IC tools and some projects, they even offer their own unique tools or bots to sort of help you catch the hype or wave. So through observing market movement, you can potentially write the ball and just flip for a quick profit. So another thing I like to do is to also look out for alphas in closed community groups, like usually, it will be through communities that I constantly interact with. And I’ve seen that they make very good calls. So sometimes by observing closely, and just following closely with these updates, you can also get good calls to get in early and just sell for quick flip or profit.

However, in this case, you need to know that these so-called alphas are only good for that moment, because a lot can change within a matter of minutes. So for example, someone can call an alpha, which means call out for a good opportunity for you to buy at this point in time, and maybe within five minutes a lot of people would have already gotten in and the price would have already risen. So if you see a little bit late, you might be late in the game, you might potentially be buying at a high so this wouldn’t be good for a quick flip.

So as with anything, always do your own research and take action only after your own analysis. All right. And next time, we’re going to look at another strategy and that is to simply be holder a long term holder of NFT projects. So in my opinion, I feel like being a holder will be good for people who have a good amount of eth to work with. And would just like to make mid to long term investments without the need to check prices daily or go through the daily grind of getting into the whitelist etc. And for holders, usually what we do is we will look for underpriced projects with very good fundamentals depending on market conditions. There are times when you can find many projects with very solid teams and have already proved their ability to make things happen in past market cycles. But the prices of the NFTs are just severely undervalued because it might be a severely bear market, or it could be that the NFT market is still very speculative in nature. So a lot of liquid is being sent to projects that are more hyped, so in a way, while the project is building, it might lose a little bit of hype. And as such, the NFT prices might go down. But this is by no means an indication that a project is bad, it is still important to understand the fundamentals. And if a project’s fundamentals are good, the teams are good these will pose great opportunities for you to enter the project at an undervalued price and just wait for returns to come back once they’re finished with building.

So I would say that the main difference in terms of cost between a flipper and a long term holder would be that usually the startup cost of a long term holder might be higher, because assuming that you follow the rule that you only invest in projects that have a proven roadmap, good track record, so on and so forth, it is unlikely that you’ll be going in at mint price, you usually have to pay a higher price than mint in order to enter the space. But on the flip side, because there’s a track record and that the team has already proved their capabilities it is less risky than just minting brand new projects. And for sure, for myself, I feel like when I get into this, so called undervalue projects, in my opinion, with a proven track record, I find that I can sleep better at night because I don’t have to worry about many aspects such as whether a new team will be able to deliver what they promised, so on and so forth, whether there’ll be pumping and dumping, lots of issues you will have to handle when it comes to minting brand new projects and holding them. And chances are because they do have a proven track record, or if they’re already building, you can expect to get a good return during the next Bull Run or once they finish with their building and announce that they are done. And they launch their next phase. And in a way, you can also see it as you know, if you buy into a project that has already been around for a while, you can also expect a shortened waiting time because the project probably took some time to build already. So in a way you are closer to the final product than if you mint a project and just wait for founders to build from scratch.

However, it certainly does not mean that if you buy into these projects, you are 100% safe, it doesn’t mean that you can just buy and forget about it. I think that at the end of the day, it is still good for you to periodically at least check on the project to make sure that they’re still on track. And still building and community is still vibing well, so on and so forth. So your own due diligence is still required in this case. And yes, in general, these are the different ways you can contribute as an investor. I think this is a very simplified version of how I can break down and categorise the types of investors in this space. So if you are looking to invest, do understand perhaps what your budget is, how much you have to start out, also how much time you have to devote yourself into this space. And those are factors that can determine whether it’s better for you to be a flipper, or a long term holder.

And with that we’ve come to the end of this episode, I really do hope that you have learned a thing or two from my sharing, and I hope that all this has been fruitful. Once again, I would like to emphasise that everything that I said over here is not financial advice. So as with everything else, please do your own research before you invest in anything. But if you have any questions at all, feel free to just write into us. You can also find me on Twitter, at VNSTR_eth. I’ll be happy to interact with you guys there. Last but not least, if you’ve enjoyed the podcast, please remember to subscribe to The Token Singaporean, and if you can, I would appreciate it if you can just leave us a review. And that would help us go a long way in terms of gaining more visibility in this space. So once again, thank you so much. I’m so happy to be here to share this with all of you and I’ll see you again in the next episode.