DYOR — To hold or not to hold I
Once you have minted, the game changes. So far into NFTs, you need not invest any tangibles except for time. But the act of minting means you have to invest some amount of money, and thus begins all the calculation in your mind.
Everyone will try to ‘sell at peak’ meaning to let go of their NFTs at the highest price at a secondary market. Today, I’ll share what helped me to decide whether or not to hold a certain NFT and for how long.
You will win some, and you will learn some
To set the stage right, it is very important to learn in the journey of grappling with the idea to ‘sell at peak’, there will definitely be times where we lose out on the moment and at worst case lose some money.
That is because NFTs become illiquid and they will most likely stay this way for a long time. It also takes some experience to figure out and have certainty of human behaviors in the market.
There are also many times which I’ve had missteps, just consider them tuition fees to learn. It was all these lessons that shaped the way I think and look at these NFT projects.
The very first lesson is to know when you want to exit. And this comes from your own research from the time when you first spotted this project until now as you have minted.
Make quick evaluations and determine at which points you want to exit. There are quite a few important exit periods which you have to take note.
Pardon my ugly drawing, as you can see, it is not my strongest suit.
40% of the projects that successfully mints out will follow this chart. There will be a handful of projects that falls in other charts and I’ll explain it in another post.
#1. Initial Price Discovery Phase
They’ll start off at a mint price, then at the first point of time is called initial price discovery, where people will try to list them at a higher price in hopes that others would buy them because a price is not yet decided.
This is the first period to exit. I will usually exit when I think that the local dip that will follow will either dip below mint price or have little hype for a strong rebound. And these thoughts should cross my mind even before the minting begins, so I know when I have already decided to sell at this time, I will mint immediately and sell immediately at it’s first price discovery.
Usually, people would not sell at the initial price discovery phase because they know that once the price goes low enough, interested buyers will then begin to buy and it will create that rebound.
The question to ask is this, do you believe that there are buyers waiting for the price to drop?
#2. Local Rebound Phase
After the price rebounded, the next best time to sell is during the rebound. Usually price do not rebound higher than the original price discovery, that is why there will be people who wants to sell out at the initial price discovery phase.
And it is also difficult to sell at this time because once the rebounding stops, the volume will begin to stale and volume is king. Many people will fail to ‘sell at peak’ at this point because it’s requires a bit of data and statistics to measure the rate of listings and transfers to know if the volume is staling soon.
In my opinion, if the reveal is soon and it will create hype, and given that I am not in urgent need of the liquidity, I will wait till close to the reveal which is possibly the best time to sell.
#3. Reveal Phase
The moments before the reveal is possibly the highest possible peak for a project over the short term. I would usually try and not let emotions get in my way and sell them at this time for maximum gains.
You should even sell projects which you would believe for a long term because the price will most likely take a dip once the reveal is over. This psychology happens because everyone is thinking that if the one they bought pre-reveal is going to become a rare design after reveal, it will fetch a higher price. It is true, a rare design or what we call a 1/1 NFT would usually fetch 20–50x the floor price depending on how nice the design is. That is why moments before the reveal, the price will get a nice pump because there are people wanting to take that bet. Truth is, that is a game for the rich because there aren’t a lot of rare designs in a collection. If you calculate your chances over many purchases and know that getting one rare out of that many would cover your cost, definitely go for it. For the casuals, this is the best time to let the rich get richer, while you get the crumbs.
#4. Utility Delivery
If you missed out on pre-reveal, fret not only if the project has plans, and has a competent team which communicates their delivery well. Because you will no longer play the holding game for short term, but for long term.
There are projects that have prices that were beyond their pre-reveal peak prices long after that because they continued to delivery utilities to the NFT and the community. But in order for you to be sure that it will run in the long term, you need to look back and see if it has what it takes to do well.
This is how 40% of the projects will perform, there is a handful of them which does not conform to this kind of chart either because they flop right away, or they are overhyped. We will be looking at these in the following weeks together!
Join Coinmonks Telegram Channel and Youtube Channel learn about crypto trading and investing
