NFT craze is coming. Seize the opportunity but also be aware of the risks

Recently, NFT has injected vitality into the long-depressed crypto asset market, and the newly launched NFTs with a value of dozens of times have stimulated investors' nerves:

The Lengtu NFT, which was just launched yesterday, had a whitelist mint (initial issuance) price of 0.0502eth. In just a few hours after it was launched, it rose to 1.4eth. It can be said that it increased by more than twenty times after it was launched .

PhantaBear, which has been popular for more than a week, has a whitelist mint price of 0.26 eth (about 6,000 RMB). Two days after its launch, the floor price (the floor price is the lowest price of all PantaBears) reached 5.6 eth, more than 20 times, which ignited the enthusiasm of NFT investors in the Chinese community and broke the curse that only overseas NFTs have the potential to become popular and are worth investing in.

Cold Rabbit and Jay Chou

Not to mention the various animal NFTs such as monkeys from overseas, whose prices have risen by dozens or hundreds of times, making people realize that the NFT bull market is coming again!

Although NFT has always been jokingly called the speculation of JPG images, the entry of a large number of giant institutions and celebrities has brought a steady influx of new money into the NFT market. Funds, resources and attention from outside the circle have supported the independent market of NFT outside the mainstream market of encrypted assets.

01
The NFT market is booming, where are the opportunities for ordinary people?

In the Google search index, since July 2021, searches for NFT have surpassed Metaverse and Blockchain, and have shown an explosive growth trend. So far, there has been no decline, and NFT has become another hot word in the crypto industry .

Data source: Google search data, 2022.1.1

The NFT market is so hot that it has attracted the attention of a large number of newcomers outside the industry. So where are the opportunities in NFT for ordinary people?

In fact, at present, not to mention domestic digital collections (Ali Auction Digital Auction Channel, Tencent's Huanhe APP, etc.), there are still very few channels for purchasing NFTs, mainly including primary market mint and secondary market purchases.

1) Primary market of NFT

What is the mint in the primary market? Earlier we explained mint as the initial issuance. The word mint means casting and creation. You can understand it as the process of casting a new NFT .

For example, if a new NFT is to be issued and sold on the secondary market, this is the minting process . Just like BTC needs miners, NFT needs to be mined manually before it can be issued.

So how do you mint NFT?

Generally speaking, when a project team issues an NFT, for example, 10,000 NFTs, it may whitelist 3,000 of them and distribute them to users who have contributed to its community.

The remaining 7,000 will be released on a unified basis at the pre-set release time. All interested parties can enter the link and mint according to the prompts on a first-come, first-served basis .

Regarding the former, the difficulty of obtaining the whitelist depends on the market conditions and the popularity of the project. For example, everyone sees the opportunity of a certain celebrity’s NFT and rushes in. A total of 30,000 people sign up for 3,000 whitelist opportunities .

Then the project team will naturally need to draw lots from these 30,000 people or screen them based on their contributions to the community, and the probability of being included in the whitelist will be smaller .

So how can we enter the NFT project community? Currently, NFT projects are generally promoted on Twitter and Discord. You can get a lot of new NFT release information from websites such as NFTGO. If you are interested, you can search for it yourself.

Of course, there are many new NFTs on the market, and most of them are not worth participating in, just like buying lottery tickets. NFTs like Jay Chou and Lengtu that can yield dozens of times the return are very rare . If you want to participate, you must do your homework , otherwise, you will just buy a bunch of JPG pictures that can't be sold.

2) NFT secondary market

After all, the NFT primary market is niche and can accommodate very limited funds. Moreover, if popular projects want to get more whitelists, it may take a lot of time and energy , which is not very friendly to large investors.

So, with such a hot NFT investment market, is there any opportunity in the secondary market? The answer is yes.

Take Jay Chou's Phantabear as an example. In fact, when the project was first launched, the price was about to break even (that is, the price in the secondary market was lower than the mint price in the primary market) . If you are optimistic about this project, this is a good buying opportunity.

Of course, the current NFT market is more of a speculative market, and the period of popularity of most NFTs is very short. Therefore, when investing in the secondary market, generally speaking, the investment cost is much higher than the price of the primary market mint, so the risk is also greater .

Therefore, for NFT secondary market investment, a comprehensive examination of NFT projects becomes more important , including the overall capabilities of the project team, the expected landing scenarios of the NFT projects, community development, the entire market value circulation, the dispersion of NFT holdings, and so on.

The investment uncertainty in the NFT market is greater than that in the crypto asset market . Of course, under the current market conditions, the potential returns from a short-term perspective are also greater.

02
High-quality NFT platform and information source

If you want to invest real money in a new field, timely and high-quality information is very important. Currently, Twitter and Discord are the mainstream propaganda platforms for information about NFT.

There are also some small communities in China that synchronize relatively high-quality information, but the latest and most accurate information still comes from overseas . At present, the relatively high-quality platforms or information integration platforms about NFT mainly include the following, which can be referred to:

Opensea:

Opensea is currently the world's largest NFT market platform, and has become a unicorn valued at tens of billions of dollars in just four years .

On the Opensea platform, you can mint, display, and auction NFTs. Currently, basically all mainstream NFTs can enter the secondary market, so this platform must be the first choice.

However, Opensea now has many criticisms, such as high transaction fees, very slow speed, very bad user experience and many other issues .

However, at present, there are no very strong competitors in the market. However, this piece of cake is too big, and many competitors will definitely emerge in the future, which is worth looking forward to .

NFTGO:

As an NFT data integration platform, it contains the latest NFT primary market information, NFT secondary market data rankings, detailed data for each NFT, NFT whale account tracking, etc. If you want to know the latest information about NFT, this platform is a good source of information . Moreover, most of the high-quality information can be obtained for free, which is more friendly to newcomers.

Of course, there are many high-quality information and data platforms about NFT, such as Nonfungible, Cryptoslam, etc. If you are interested, you will naturally encounter these platforms after you advance in the NFT field .

03
NFT Market Risk Warning

As we mentioned earlier, in the NFT vertical market, investment uncertainty is greater than that of crypto assets, and the risks are also greater:

1) Low liquidity

When choosing an investment target, we all know that the liquidity of an asset is very important. However, in the NFT market, we have seen that the liquidity of most NFTs is very poor after the hot period .

Especially when the market conditions are not so good, there are basically not many buying orders. If an NFT project does not have the chance to become popular again and there is not enough liquidity to sell it, then it will basically become a waste of JPG images in your hands .

Data source: Cryptoslam,
Top 10 NFTs sorted by daily transaction amount and daily transaction volume, 2022.1.17

2) Market heat changes rapidly

The popularity of the NFT market changes very quickly. The attention of investors in this market is a very core resource. New projects and new hot spots emerge every day. It can be said that whoever can grab the attention of investors can continue to own the market.

However, the cruel reality is that the vast majority of NFT projects have a short life cycle and are submerged in the rapidly changing market.

Data source: NFT Nerds website, the top 10 NFT projects ranked by transaction volume within 7 days. The daily transaction volume of most NFT projects reached a high point and then plunged. January 17, 2022

3) Small market value, large space for shady operations

It is an open secret that the crypto asset market lacks supervision and is full of shady dealings. However, compared with the crypto asset market, the NFT investment market is even more immature, especially when the project market value is small and there may be more shady dealings such as transferring money from one hand to the other . For ordinary investors, fairness is even more worrying.

Therefore, although the NFT market is very hot and we often hear stories of people getting rich tenfold or even dozens of times, the fact is probably that the NFTs purchased for thousands or tens of thousands of dollars have no liquidity and eventually become worthless JPG pictures lying in your wallet .

Before we really plan to participate, we need to realize that the NFT market is still very immature. Although the possible opportunities are very large, the risks brought by various uncertainties cannot be ignored, so we must be cautious when entering the market .