When it comes to buying into NFT collections and brands, NFT enthusiasts often agonise over whether they should buy a rarer piece for a higher price or a floor piece for floor price. Of course, the best outcome is to buy a rare piece at the floor — but this is not usually possible simply because rarer pieces are often rightly priced higher. In some collections, rarer pieces may even have added utilities compared to more common pieces especially if certain traits within a collection yield added advantages.
I guess the answer to this question lies mainly in what you want out of your NFT.
If your main reason to buy in is the art and the collectability, and you’re planning to diamond-hand your NFT until the end of time, then choose an NFT that you like the look of the most so long as it is within your budget. Forget about rarity.
If your main reason is to join a gated community and nothing else, then buy a floor piece.
If your main reason is financially-driven, then the answer as to whether you buy a rare piece or a floor piece really depends on the state of the NFT collection and the market in general.
My personal observation is that it is better to buy rare pieces and pieces with sought-after traits when prices are low and hype has died down. When prices are high and entry is expensive, then floor pieces would suffice.
This is because the price variation between rare and common NFTs narrow greatly when the prices and volume are low. When an NFT is relatively cheaper, then it would naturally follow that the rarer pieces within that NFT’s collection will also be cheaper in absolute terms. The actual amount paid, though higher than floor, is still low.
I’ll use a Web2 example to illustrate this. If I were to buy a plane ticket and it costs me only $10, with upgrades to my seat costing another $10, that’s technically a 100% price difference. However, I still wouldn’t think twice about paying for the upgrade since the total cost is only $20. I don’t care that the premium is 100% of the ticket’s original price. If, however, the plane ticket costs me $1000, I wouldn’t pay for an upgrade even if the upgrade “only” costs 10% of the “floor” ticket’s price, since that would mean that I need to pay $100 extra to upgrade. The absolute amount I’m paying is still a lot even though percentage-wise, it may seem like a good deal on paper.
To add to this, it seems that for many NFT collections, the percentage difference between floors and rares paradoxically narrows when prices go low. So while under normal circumstances, a certain rare trait may be 50% above floor price, when that collection tanks, that same rare trait may only be 20% above floor price. This is not always the case of course, especially when traits are so rare that their price can be artificially maintained by a few individuals. However, when it is the case, it represents an added “discount” on top of the absolute-price concept. Not only would you be getting a cheaper price in absolute terms, you’d also be getting a cheaper price because people don’t value their NFTs that much above the floor anymore.
It is worth nothing that rarer traits do have less liquidity than floor pieces if you’re looking to price your specific NFT fairly based on its traits. Of course, if you floor your rare NFT then it would be more liquid than an actual floor NFT — but you wouldn’t be getting as much as you otherwise could for it.
In summary, whether or not you buy a rare NFT for more money or a common floor NFT for less money depends on why you’re buying the NFT in the first place. If you’re doing it for financial gain, then buying rares when the floor price is low may be a play since your potential for upside is far greater than if you were just going to invest in a floor piece.
Written by: Jpegtologist
