Sometimes, all it takes is the right spark to ignite a narrative.
Right now, it seems like the launch of ApeCoin (and the airdrop to Bored Ape Yacht Club holders) might have done just that to the NFT space.
And let’s face it, for anyone without a Bored Ape of their own, the FOMO is real.
Afraid of missing the train on the next big thing? You’re not alone. The secret is not to succumb to fear of missing out (FOMO), but instead, learn how to play the non-fungible token (NFT) game to your advantage.
- Expect your investments to go to 0.
- Invest in the team and brand.
- Community is the ultimate driver.
To change your fortunes in the NFT space, you might need to change the way you think. So let’s break down some of the principles you can apply to your NFT portfolio, as inspired by Javier Ang’s tweet following the recent The Blockcrunch Podcast.
Never invest more than you can lose
Easy to say, but for many, harder to do.
Like when investing in degen altcoins, it’s always wise to assume that some projects will go to zero. However, some of those that succeed will (hopefully) more than make up for the losses of the doomed ones.
Just like this recent article of ours, where DeFi Edge explained making a checklist before investing in a project, the same should apply to NFTs.
Invest in the team
Research the team, not just the project. Say it again. Let it sink in.
Think about it: remember the Jungle Freaks debacle last year? Any investor who’d done sufficient due diligence might have known to stay away from a project whose lead artist had a history of drawing some seriously dodgy cartoons.
Research the team and reach out. Are they open and communicative, easy to reach via Discord or other means? Join their channels and get stuck in. Ask questions, get to know them!
Find out if the team has built in crypto projects before. If so, how did the previous project pan out? Try and get a feel for if they will continue to stick around and build, even in a bear market.
Lastly, consider that a roadmap can always be improved on, especially by a great team.
Prioritizing the quality of the team over the initial roadmap is the smart move. A great roadmap without a great team is just a chart.
Grass roots community beats influencers (every time)
Community is the number one driver of success in the NFT space.
Unfortunately, many projects that pay influencers to shill them, but without a thriving community behind it, no amount of shilling can manufacture a project’s long-term success.
Always look for projects that have built up a loyal community. The shill can come afterwards. And a combination of the two can be an unbeatable cocktail.
Brand is key
Building hype around a brand is key.
Look for those projects that have potential to expand beyond what they currently are. An easily recognizable brand gives off an aura of success. Many investors will invest in a brand before the project’s product has even been released.
Look for those opportunities and pounce when you find them.
For a trader, the question to ask yourself is: Can I flip this? Translation? Is there a bigger degen than me out there, that will buy this from me for a higher price in the future?
Be wary of the whales!
Just like with fungible crypto tokens, an NFT can be subject to whale manipulation. If the majority of the NFTs are held by a few wallets, be wary – they could dump on everyone else in a heartbeat if things aren’t going their way. Look for those projects that have a wide and thorough distribution across a thriving community!
It’s worth pointing out that, if there is a large wallet, but the wallet belongs to the team, that is fine for the most part. A lot of projects mint and keep NFTs for future giveaways and airdrops. This doesn’t mean it’s safe territory, but it’s surely better than having five non-team wallets holding 50% of the total supply.
The NFT market is notoriously tricky to navigate. It’s highly speculative and massively diluted with an abundance of projects, the vast majority of which are quite literally worthless, and born of sheer opportunism. Remember, you’re competing against full-time degens: due diligence and deep research is the name of the game (and the only way to gain an edge!).