As the market is clearly super-dead right now I thought I'd summarise my thoughts, and give an insight into what I'm doing in this current market.
Market conditions
Before I talk about individual projects or various themes I think it's really important to mention the unfavourable conditions NFTs have had in the last 2 weeks. I'm going to try and not use the word of the month 'macro', but essentially ETH volatility has always been a bad thing for the NFT market, and we are seeing that more than ever. I’m really not an expert in this whole area so if I’m chatting shit ignore me but these are my main considerations:
Those in stables likely don't want to buy ETH to make an NFT play as their 13e Azuki at $1800 ETH ($23,400) could be an instant $2,600 loss ($20,800) within a day if ETH drops to $1,600, something very possible in this market which happened last weekend. The flipside is that those in ETH look to be liquid as we approach this $2,000 ETH resistance many are talking about, giving them the ability to be able to sell their ETH without worrying about selling their NFTs to do this.
Furthermore, we have alts swinging with much greater volatility than NFTs, and experienced crypto traders are likely to be putting NFTs on the back burner in favour of trading the more volatile market.
Finally, I think the USDC scare many had last weekend has a much greater impact than many realise. A lot of new entrants who had stables will have realised how uncertain crypto can be, especially with how much the media likes to lambast crypto. We all know how small our market has got with 'PVP' being a common key-word of late, this type of thing just isn't going to help that long-term.
Free/degen mints
I think it's fair to say since the Owls mint on March 4 and Gitcoin on March 8 there has been a distinct lack of volume on any free/degen mint. Projects which would always run in previous conditions have been dying out very quickly, and it feels like there are no incentives for anybody to hold a mint longer than 5 minutes.
This always tends to happen when there hasn't been a recent success story to punish people who insta-sell, or to make people fomo on secondary. We then end up in this death spiral where we see huge listings for very small profit instantly after mint. In these conditions secondary buyers usually get punished and eventually give up and sit back, and that's exactly where we are now.
A final note on this subject is the botting of these mints has just got completely out of hand. I think minting has become more and more solved, and the value has been finding the mints nobody else knows about rather than ‘winning’ a gas war on a mint that’s common knowledge. We have people going for 1,000+ of some of these free mints and although it is possible for a special project to get through the initial listing pressure, in a market that is already struggling it’s just not easy.
‘Bluechips’
As predicted, blur farming has pulled back a lot with lots simply getting bored of farming and many of the larger whales such as Machi taking huge losses in a retracing market. I've always said that blur farming was keeping many of these 'bluechips' afloat with indicators for this being the lack of rare sales, trait floors and to be honest, just any signs of new collectors.
The one exception is Cryptopunks, which since having wrapped punks added to blur have been farmed very heavily, boosting the floor by 20%. I still think this is likely to unfold in a similar way to Bored Apes earlier this month when the farmers capitulate but we will see, I could be wrong.
We saw Doodles, CloneX and Moonbirds all take huge hits in the market as collectors got frustrated and started venting on social media. I think these collectors all have a point with continuous poor execution from all three teams but I also feel the floor price declining was the match to start this fire. It wasn't news that the CloneX team was very poor at execution and the Nike products they revealed were sub-par, but in my opinion the writing was on the wall before the merch even released, similar to the Doodles 'socks' or Poopies 'not an NFT project' quote.
I do sympathise with these 'bluechip' teams, In 2021/early 2022 when these projects launched there was huge market participation and significant demand from a market 20x bigger. As 95% of market participants leave it's only natural the demand/floor will go down and when this happens I think they're under a much closer microscope. That being said, with the amount of money each team made there is an obligation to reward holders, keep them happy and I think there has been a complete lack of innovation within this.
(I know there’s blur but this is the only good farming-free representation i could find)
As this all plays out I think Azuki, Pudgy Penguins and Yuga are the only 3 projects I would feel confident of sticking around and thats where I will look to invest when I feel more confident in the market.
My personal trading plan
New projects:
I think going into the Arbitrum airdrop and beyond we’re likely to see some fun stuff happen on that chain, with no tools and limited botting it could be like Trump NFTs again where there is a fairly natural distribution and a much more organic feel about the trading. An example is Arbi socks which dropped last week and are at 0.08 now: https://opensea.io/collection/arbitrumsocks
This is where I’m going to spend most my effort this week (make sure you have eth bridged, not only to play the token airdrop but for NFTs too!)
Still monitoring eth projects: despite the market being horrible we’re overdue that one breakout project like checks/goblintown etc to start a meta - keeping a close eye on anything innovative. Until something springs out I think my trading style is likely to be minting only with very rare secondary action, will re-assess as the market shifts.
Bluechips: I think the noise around these bottoming is getting stronger, it’s likely in a month we will all look back and think it was so obvious buying some of these projects at these prices, however I’m still being patient and would rather buy strength than catch a knife. Crypto usually goes BTC>ALTS>NFTs, if i see a strong ALT bounce I may look to bluechips at that point.
Conclusion
To conclude, it’s fairly apparent the market is taking a huge pull back. Taking time off is honestly a good play right now, but I am certain we will have a good bounce when it comes. I have tweeted this a couple of times but it still rings true today:
”The main reason I'm so sure on a second NFT bull run is because all those that watched people early into NFTs make all this money, will want to be 'early' into the next run
Their 'early' might not be early, but i still think they'll be back”
Keep an eye on the market, take time to learn, refresh and get your mindset right because when volume returns you’re going to want to do your long days then!
Thx seb
good read