Blue-Chip NFT Investing: The Complete Guide
NFT investing is the wild west of crypto. If crypto investing is the wild west of finance, then NFT investing is the wild west of crypto. It’s more difficult to keep up with, easier to be taken advantage of, more intricate, and perhaps more profitable. Here are a few pointers to help you survive, if not prosper, in the NFT era.
NFTs in a nutshell
NFTs work in the same way as any other cryptocurrency, with the exception that each one has its own unique serial number. Most cryptocurrencies are interchangeable (your Bitcoin = your friend’s Bitcoin), but NFT #472 will always be distinct from NFT #473, allowing each one to be associated with a unique image, song, club membership, and so on (the possibilities are endless!).
The majority of individuals mistakenly believe that purchasing an NFT is the same as purchasing an image on the internet. That’s a simplification; NFTs grant you the right to sell that NFT, but they can also grant you additional privileges, such as access to exclusive content/drops, membership in private groups, intellectual property rights, and the ability to play that character in a video game.
MetaMask is used to purchase NFTs on platforms such as OpenSea. If you’ve ever used Uniswap, you’ll feel right at home with OpenSea.
How much should you invest?
In a previous piece, we suggested that crypto should make up about 5-10% of your whole portfolio. If you’re inclined to invest, we’ll use the same 5-10% rule of thumb to determine how much of your crypto portfolio to put into NFTs. Put $2.5K to $5K into an NFT if you have $25,000 in bitcoin. Put $5K – $10K into an NFT if you have $100,000 in crypto, and so on. Just keep in mind that blue-chip NFT investment is pricey, so if your crypto portfolio is worth $2,000, your possibilities with $200 are severely limited. You must either become a scalper or place bets on future blue chips (more on that below).
The most tedious method for dealing with NFTs
You can just buy and hold Ethereum if you have no interest in NFTs but still wish to profit from them. The majority of NFTs run on Ethereum, and NFT traders consume a significant amount of it. If that’s too wide, you can also purchase the NFT-focused blockchain platforms Flow and WAX, which use the same currency. In the long run, most ETH holders will outperform most active NFT traders.
Long-term vs. short-term investing
Some people are scalpers in the NFT game, while others are long-term investors. Scalping NFTs is similar to scalping tickets to a sporting event: you get in early, collect as many as you can (usually a few hundred dollars each), and then resale for a profit later. The NFTs you mint will sometimes take off, but not always. Instead of minting, you might look through OpenSea’s auction listings for NFTs that are undervalued and buy them (“snipe”) for resale.
Scalping can be lucrative, but it’s a game that requires a great deal of focus and practise (luck doesn’t hurt either). You might easily lose a lot of money if you make a mistake. Worse, the NFT world is set up to make individuals feel FOMO (fear of missing out), so be ready to deal with feelings you’ve never dealt with before. Don’t become a scalper if you have trouble dealing with the emotional element of trading.
The alternative strategy for NFTs is to invest in and hold high-quality projects for the long term. That’s the technique that regularly wins, and it’s the one we advocate. Blue-chip projects (though they’re very pricey) and value picks are the two categories of high-quality projects (aka future blue-chips).
Blue-chip strategy (ultra-expensive)
In the same manner that Bitcoin and Ethereum are blue-chips in crypto, there are blue-chips in NFTs. The only drawback is that they’re really pricey right now, so we can’t recommend them unless you’re extremely wealthy.
The original, famous CryptoPunks collection of 10,000. Buying one of these is comparable to owning a limited-edition Rolex watch. They’re both iconic and prohibitively pricey. Anyone with CryptoPunk as their Twitter handle will get a lot of attention. Price: $300,000 and above (I know…)
Art Blocks is a platform that sells limited-edition digital art by well-known artists. They offer three separate collections, with their “Curated” line being the most prestigious. Almost any “Curated” Art Block is a good investment, but their first one, the Chromie Squiggle, is a must-have. The cost is $40,000.
Bored Ape Yacht Club: This was the first project to add a roadmap, a membership community, and other amenities to the CryptoPunk concept. Nonetheless, it is prohibitively pricey. An ape costs $150,000 or more, a mutant ape costs $20,000 or more, and an ape dog companion costs $10,000 or more.
Cool Cats: This is the blue-chip cat collection, complete with Hello Kitty-style artwork. You can’t go wrong with this because the Internet loves cats. The cost is $40,000.
Gutter Cats has a significantly lesser supply than Cool Cats, but a more edgy art style. Still a fantastic project and team. Price: $12,000 and over.
Damien Hirst’s Currency: Damien Hirst, a world-renowned artist, has produced a flagship NFT collection called Currency. This is the first major example of a conventional artist breaking into NFTs, thus it has a good chance of succeeding in the long run. Price: $20,000 and up.
Investing strategy based on value (future blue-chips)
If you don’t want to put $20,000 or more into a blue-chip NFT, investing in future blue-chips is an excellent option. Find great teams that are willing to work long-term on ideas that aren’t immediately popular. As the market catches up, this is how fortunes are made. After all, every blue chip has a beginning.
There are a number of other future blue-chip picks out there, but here’s one that I’m personally invested in (so I’m biassed, but with conviction).
Elephants that haven’t been tamed
Untamed Elephants fulfils all of the requirements. It is historically significant because it was the first large charity-driven NFT (goal is to save the elephants). It features cool art, amazing collaborations, a non-anonymous team, and it’s a hidden gem, to boot. At the time of writing, the cheapest elephant costs less than $100, though this may not be the case for long. Hundreds of elephants are currently available for the price of just one of the blue-chip NFTs listed above, yet the total supply is only 7,500. I’ve purchased 50 elephants, including the fourth rarest.
Other Undiscovered Treasures
There are too many other alternatives to name here, and you can get my thoughts on them by following me on Twitter (@adamagb), but here are a few things to look for in hidden gems:
(1) Be wary of nameless teams. There’s a reason they’re anonymous.
(2) Avoid things that have lately gone up too quickly since they tend to retrace.
(3) Appreciate the arts because appreciating the arts will help you get through difficult times. And…
(4) Stay away from projects that focus too much on the cost.
Every week, five or six new ventures are announced that turn out to be scams. Many of them have the above-mentioned red flags. Keep in mind that 1,000+ NFT collections are released every month, and almost all of them will trade for less than their launch price a month or two later.
Should you get the cheapest NFT in a set or pay a bit extra for a higher-quality one?
Because each NFT is one-of-a-kind, costs might vary greatly (the top CryptoPunk is worth millions of dollars, for example).
If you’re just starting out, go for the cheapest one in the bundle. They’re the simplest to sell and the simplest to earn from as values rise. If you’re more experienced, you can look for bargains. Rarity Tools, which ranks NFT collections by Rarity, is an excellent tool for deal searching.
A more advanced strategy is to use OpenSea’s filter to locate rare traits and then buy the cheapest of those uncommon traits. If NFTs wearing gold crowns are uncommon, for example, get the cheapest gold crown.
I’ll also mention that the best NFT deals I’ve found have come via the project’s Discord channel. People will sell their NFTs privately for a discount there to save money on fees, and existing members will even assist you with choosing one. Scammers abound, so be cautious while using a middle-man platform like NFT Trader. If you’re unsure, send us an email and we’ll gladly assist you for free.
How to Avoid Being Scammed
It’s been a decade since I was duped in crypto, but it only took a week for me to get defrauded in the NFT realm. Scammers construct bogus websites, NFT collections, and even try to infect you with viruses or make up sob tales. Three quick guidelines:
Use a hardware wallet to store your NFTs. For crypto, I like the Trezor Model T, but their NFT support is a little more complicated, so stay with the Ledger for your NFTs. (Also, only purchase the Ledger from the company’s official website.)
Anyone who approaches you directly on Discord or via email should be avoided. It’s likely that they’re attempting to deceive or manipulate you.
If an offer seems too good to be true, don’t buy it. This is where I went wrong. I spotted a great offer on an NFT, but it was a sophisticated fake that went live just before I noticed it.
Help is available at no cost.
If you’re having problems getting started with NFT investing, email us and we’ll do our best to assist you!