If your only way to stay in your closest social circle was to keep an asset in your possession, would you do it?
There are many reasons why people buy NFTs. Many buy NFTs with the intention of making money by selling them at a higher price. Some adore their NFTs because of the artwork that is attached to the NFT. Others like the monetary and non-monetary benefits that they get from holding NFTs, such as through revenue share or access to certain useful tools and platforms.
An interesting group, however, specifically buys their NFTs to join NFT-gated communities. This may be because they’ve heard good things about those communities, and simply want to be part of the club. This is not to say that these people will never sell their NFTs if the price goes high enough, but if the primary intention is to be part of that community, then their likelihood of selling is low — even when good selling opportunities arise.
While this phenomenon is by no means unique to NFT projects, it certainly applies a great deal more to them since NFT communities are typically compact and closely-bonded owing to their relatively smaller collection sizes. Most NFT projects only have between 5000 to 10000 NFTs, and since fractionalisation is still uncommon, this means that the community is limited to as many individuals as there are NFTs. Contrast this to Bitcoin, for instance, where there are 21 million in total and anyone can buy and own even the tiniest fraction with relative ease. This is why there are often technically over a million people in the Bitcoin community.
Furthermore, even investors who’ve initially bought for other reasons, such as flipping their NFTs for a profit, may grow to love the community over time. In such cases, when the time comes to sell, they may have a change of heart and decide not to. Even if they do sell, they may not sell every asset that they have in that project. After all, just the possession of one single NFT is enough to be part of a project’s community. This may get slightly complicated if we’re talking about inner “whale” groups that are gated by the number of NFTs that one holds in a project, but by and large, one NFT is enough.
This kind of community attachment is extremely relevant when considering the price movements of NFT assets. Communities, where holders cannot bear to leave, will see those holders “diamond-handing” their NFTs for a long time regardless of market conditions.
To some, their NFT communities are like family, and they simply cannot fathom themselves selling their valuable NFTs at a profit if it means that they will be estranged from their very families.
Written by: Jpegtologist
