6 Tips for Growing Your Crypto Portfolio with NFT Trading
Imagine playing games you love and earning money along the way? Not just a little money, we’re talking about enough to free you from the clutches of full time employment! I’m Mateen a.k.a. DCLBlogger and in this post, I’ll be going through how my journey of trading non-fungible tokens (NFTs) and crypto collectibles has done just that. And I will give you a few pointers on what to look for when trading.
First of all I don’t play games, but I trade collectibles. I buy bulk from people who I’ve negotiated a price with, and sell these items on different marketplaces I’m very familiar with.
You wouldn’t think there’s a lot of money in this, but some crypto collectibles, like Decentraland parcels, can reach prices of thousands and sometimes hundreds of thousands of dollars per land. There’s a LOT of money to be made if you understand how these digital economies are evolving.
So let’s get started. What should we look for when we want to invest and trade crypto collectibles?
1. Funding
Do the developers have enough funding to go through a bear market? There’s only a handful of NFT projects that I can think of, that are capable of doing that.
The first one is Decentraland. They received over $20 million during their ICO. Investors spend more than $15 million on land and over $50 million was spent trading land on the secondary marketplace. That’s huge amounts of money, and that sort of consistent volume over the last 2+ years gives me confidence that this project is thriving.
Another example would be Gods Unchained,which received over 33 thousand ETH during its pre-sale. This equals around 8 to 10 million dollars. Again, quite a lot of money to ensure they can build out the game and have enough for marketing.
Others like Enjin have been around for a while. Projects like these are great and have proven that they can get people collectively spending big amounts of money. So you know, once the secondary marketplace opens, there’s money to be made buying and selling digital assets.
If a project that raises only $300.000, there’s a big chance that the weekly trading volume will drop once the marketplace goes live. If you invested 10 or 20 ETH in such a project, it will be difficult to pull that money out. Making a profit is even a bigger challenge!
2. Active Community
Another important aspect to consider is the activity of the community. Are people consistently joining this project Discord? Before I invest I like to see ten to thirty people joining the project’s Discord every day, also after a pre-sale. On top of that there needs to be consistent chat activity. If there’s only a few comments every few days, we have a problem.
3. Socially Shareable
Is the project sexy on social media? In a project like Decentraland, I can share videos of us collectively playing games, dancing in clubs, checking out a museum and it’ll get a ton of shares. These are the projects I want to invest in. Ones that have a wow factor.
4. Known Supply Caps
Projects that have released an unlimited amount of non-fungible tokens like CryptoKitties have seen some of their new kitties sell for cents. Yes, the original (older) Kitties will hold value, but to grow beyond just early investors you need a more lucrative model for new investors.
Projects like Axie Infinity are working on controlling their Axie-supply to make sure a flooded market doesn’t kill the marketplace. This did happen to MLB Champions. In this fantasy sports game you can collect figurines based on actual baseball players. In turn, they can be used to win more figurines when your team won or hit certain milestones.
Sounds fun right? It was… until everyone was winning a ton of figurines and trying to sell them at the same time. Hundreds of thousands of figurines were added to the marketplace and suddenly they were worth peanuts. Currently the game has only 0.6 ETH of trading volume per week!
It’s important to know how scarce items will be. This goes for the pre-sale items, but even more for future items released through gameplay.
5. Market big enough
Is the market big enough to scale up and reach a big, mainstream audience? Knowing that Gods Unchained is a game in the trading card game genre, it has the potential to be huge. One of the biggest brands in that market is Hearthstone, which has millions of players around the world.
This gives me confidence that if the game development goes well, it has the potential scale up, reach the intended community and become a hit.
6. Calculate Hype
Many people believe that investing in a pre-sale is much easier than trading. But this is a BIG mistake many people made with Initial Coin Offerings (ICO). During the 2017 crypto rush many people invested in ICOs, but once the ICE hype was over and coins hit the marketplace, there was a huge dump and prices plummeted.
There will always be some hype surrounding ICOs or pre-sales, and it’s also happening with NFTs. Developers have some great ideas, but once money is raised the development will take two to three years at least. Will people hold on to these tokens that long in this impatient crypto environment? Most likely not. [Sometimes the best buy opportunity is after the dump -ed.]
