In 2021, the surge in popularity of Non-Fungible Tokens (NFTs) was undeniable, with collectibles becoming a hot commodity for investors. However, as the initial excitement began to wane, many began to withdraw from the NFT market. Recently, interest in NFTs has seen a resurgence, but the current state of the market offers little cause for celebration as collectors find themselves mired in disappointment.
As the world of Non-Fungible Tokens (NFTs) continues to evolve, it’s essential for investors to adapt their strategies to the current market conditions. Amid the recent bear market, investors have been grappling with new challenges and uncertainties. However, this doesn’t necessarily signify the end of opportunities. On the contrary, a bear market can present unique investment prospects for those who know how to navigate it effectively. In this article, we will explore some strategies that can be employed during an NFT bear market, and also delve into the features to look for in NFT explorer tools like NFTScan.
1. Diversification: One of the most effective strategies in any investment scenario is diversification, and the NFT market is no exception. In a bear market, it is crucial to spread your investments across a range of different NFTs. This can help mitigate risk and potentially yield better returns. Diversification can be achieved by investing in a variety of NFT categories, including art, music, virtual real estate, and more.
2. Research and Due Diligence: The importance of thorough research and due diligence cannot be overstated. In a bear market, it becomes even more critical to understand the value and potential of the NFTs you are investing in. Look into the creators, the history of their work, the rarity of the NFT, and the demand in the market. Tools like NFTScan can be invaluable in this process.
3. Long-Term Perspective: While it’s natural to be concerned about short-term market fluctuations, it’s essential to maintain a long-term perspective. The NFT market, like any other, will have its ups and downs. Investors who can weather the short-term volatility and stay committed for the long haul are often the ones who reap the most significant benefits.
4. Buy Low: A bear market, by definition, is characterized by falling prices. This can present an excellent opportunity to buy valuable NFTs at lower prices. Look for high-quality NFTs that have experienced price drops. However, it’s crucial to ensure that the price drop is due to market trends and not a decrease in the NFT’s value or potential.
5. Use a Value Approach: Instead of following the crowd, use a value approach to investing. This involves identifying NFTs that are undervalued by the market but have strong fundamentals. These could be NFTs from reputable creators, unique or rare NFTs, or NFTs with high utility in a particular blockchain ecosystem.
Now, let’s shift our focus to NFT explorer tools like NFTScan. These tools can be incredibly useful in navigating the NFT market, especially during a bear market. Here are some features to look for:
1. Comprehensive Search: The tool should allow you to conduct a comprehensive search of the NFT market. This includes searching by creator, owner, marketplace, and other relevant criteria.
2. Detailed Information: The tool should provide detailed information about each NFT, including its price history, ownership history, rarity, and more. This information is essential for conducting thorough due diligence.
NFTScan data
3. Real-Time Data: The NFT market moves quickly, so it’s crucial to have access to real-time data. The tool should provide up-to-date information about prices, sales, and other market activities.
NFTScan data
4. User-Friendly Interface: The tool should be easy to use, with a user-friendly interface. This will make it easier for you to find the information you need and make informed decisions.
5. Reliable and Trustworthy: Finally, the tool should be reliable and trustworthy. Check reviews and ratings to ensure that the tool provides accurate and reliable information.
Spot opportunities in the NFT market before prices drop
Let’s talk about how you can spot opportunities in the NFT market before prices drop using NFTScan.
1. Track Whale Activity
You know those big investors who own a lot of NFTs, right? We call them ‘whales’. Their buying and selling activities can greatly influence the prices of NFTs. For example, in the Bored Ape Yacht Club market, we’ve noticed that when whales sell a lot of their NFTs, the prices usually drop.
NFTScan Data: Trader Change of BAYC (3 Months Time Frame)
Think of it like a seesaw: when one side (whale sales) goes up, the other side (prices) goes down. This relationship isn’t perfect, but it’s strong enough that we should pay attention to it.
Interestingly, it seems like these price drops often happen after the whales start selling. It might be because the market needs some time to adjust to the sudden increase in NFTs available for sale.
So, if you keep an eye on what the whales are doing, you might be able to predict when prices are about to drop. This could give you a head start in finding good deals in the NFT market.
2. Spot the Market Imbalance
Let’s talk about how you can spot chances to buy low in the NFT market.
Imagine you’re at a yard sale, and there are way more people trying to sell their stuff than there are people looking to buy. That’s what we call a ‘market imbalance’.
Recently, we noticed this happening in the Bored Ape Yacht Club (BAYC) market. When we looked at the last 3 months' time frame, we saw that there were almost twice as many people selling their NFTs as there were people buying them.
NFTScan Data (3 Months Time Frame)
This kind of situation can make prices drop, because everyone is trying to sell, but not many people are buying. It’s like the sellers are in a race to see who can offer the lowest price to attract the few buyers that are around.
So, if you see more people selling than buying, it might be a sign that prices are about to drop. This could be a good time for you to step in and grab some bargains.
- Unusual Price Volatility Increase Think of the market as a party. When a lot of people (or money) are coming and going, we say the party has ‘high liquidity’. This usually means the party is in full swing. But sometimes, this can also be a sign that prices are about to drop.
Take the Bored Ape Yacht Club (BAYC) for example. In February and June, there was a lot of activity in the BAYC market. But instead of making prices go up, this actually signaled the start of a price drop. This might be because a lot of people were trying to sell their NFTs, but not enough people were interested in buying them.
NFTScan Data: Trending of BAYC (1 Year Timeframe)
Things got even more interesting from June to July. The amount of money coming into and out of the BAYC market was changing a lot, which showed that people weren’t sure about what was going to happen next. This uncertainty, along with more people trying to sell than buy, likely led to the lowest price in July .
So, if you see a lot of activity in the market, or if the amount of money coming in and out is changing a lot, it might be a sign that prices are about to drop. Keeping an eye on these changes can help you spot good deals in the NFT market.
Strategies Used By Profitable NFT Holders Simplified
If you want to be successful in making profits with NFTs, there are some strategies used by top earners that you can follow. Here are the key points:
1. Explore Different Platforms: Don’t stick to just one NFT marketplace like OpenSea. Look for unique opportunities on other platforms like Blur, X2Y2, and LooksRare. This can give you more options and better chances to make profitable investments.
2. Bulk-Minting: Participate in the early minting process of new NFT projects by getting on the whitelist. This allows you to mint NFTs before others and potentially earn more. Some investors also directly mint in large quantities through contracts for faster and bigger returns.
3. Strategic Selection and Diversification: Buy NFTs from established blue-chip projects based on their rarity. Rarer NFTs often hold their value well over time. Also, diversify your investments across emerging projects to reduce risks and increase chances of high-value assets.
4. Strategic Batch and Decline-Rate Buying: Purchase NFTs in bulk and buy more aggressively when prices drop significantly. Set alerts for specific collections and act quickly when prices hit your target lows.
5. Bottom-Fishing: This is a risky strategy where you make below-market-value offers for NFTs, hoping to get undervalued assets. It requires good market knowledge and patience.
6. Prioritize Rarity in Blue-Chip Projects: When dealing with major blue-chip projects, focus on buying NFTs that are rare. These tend to hold their value better over time. Use alert systems to monitor specific traits and make timely purchases for potential profits.
Remember, investing in NFTs carries risks, and it’s essential to do your research and be cautious with your investments. Following these strategies can increase your chances of success, but always be prepared for market fluctuations and do not invest more than you can afford to lose.
Conclusion
The NFT bear market presents both challenges and opportunities for investors. By employing strategies such as research, diversification, and a long-term vision, investors can position themselves for success. NFT explorer tools, exemplified by platforms like NFTScan, serve as vital instruments to make informed decisions and navigate the intricacies of the NFT market. As the NFT ecosystem continues to evolve, staying informed, adaptable, and vigilant remains key to capitalizing on this exciting and dynamic digital asset class.
About NFTScan
NFTScan is the world’s largest NFT data infrastructure, including a professional NFT explorer and NFT developer platform, supporting the complete amount of NFT data for 16 blockchains including Ethereum, Solana, BNBChain, Arbitrum, Optimism, and other major networks, providing NFT API for developers on various blockchains.
Official Links:
NFTScan: https://nftscan.com
Developer: https://developer.nftscan.com
Twitter: https://twitter.com/nftscan_com
Discord: https://discord.gg/nftscan
Top comments (0)