NFT Investment Strategies
Let’s assume you have looked at a few NFT collections and determined one that you would like to buy an NFT from.
You could click on ‘Buy Now’, accept the transaction in your MetaMask and be done with it, but having a strategy behind your actions is always a good idea.
Here are a couple of strategies that I have seen in the space:
1) Buy & Hold:
You buy an NFT with the intention to hold long term (in the NFT space, ‘long term’ means at least 1 year). Your money is tied up with the JPEG and you hope that the floor price rises over time.
This is the least stressful and time consuming option. You decide whatever amount of profit you take (if there is profit to be taken), but it could mean that you sell too early because you only have one NFT.
2) The Rule of 3:
If you can afford it, always mint or buy 3 NFTs from the same collection. This way you can sell one NFT to re-coup your initial investment (and essentially hold the other two for free).
Then, you can sell the second one when you have reached the next level of profit where you think: “Okay, this is meaningful profit to take”, while still keeping the last one for a potential moon shot.
If you execute this strategy, you will be successful. Of course, the NFT has to play ball and actually rise in value. 😊
3) Mint flipping
Another strategy is to try to join whitelists to be able to take part in the pre-sale of an NFT. For any good project, the mint price will be the lowest price you will get (for bad projects, the price can go to zero after a while of course).
Being part of a pre-sale guarantees you the low mint price and most good projects will sell for 1.5-3x of the mint price on secondary markets once it’s sold out. So by ‘simply’ joining a whitelist, you could achieve a 50-300% return on your investment.
Said this, it is actually not always easy to join a whitelist. A lot of projects use it as engagement farming tool now and have ridiculously high barriers to entry (like inviting 10-20 people into the Discord, for example).
Personally, there is a limit of what I’m willing to do for a whitelist. If it doesn’t happen, it doesn’t happen. There are plenty of other opportunities.
But it is an effective way to ‘stack your ETH’ and build up capital to buy into blue chip projects. A lot of people have made their NFT wealth this way.
That’s all for this week. If you liked this newsletter, please vote with a ‘Yes’ 👍 below!