NFT

Turning 1.3 ETH into a million dollars, eight NFT investment philosophies from the Twitter account The NFT Edge

2022/3/7

The Twitter account The NFT Edge has shared investment insights in the NFT market over the past few months, urging investors to focus on doubling their investments rather than considering most projects as Blue Chip stocks. In fact, out of over a hundred NFT projects he has encountered, the Blue Chip ratio is not even 3%.

Original link: https://twitter.com/thenftedge/status/1499416370567516160

"In the past five months, amidst a general market downturn, I invested 1.3 ETH in over a hundred NFT projects and made a million dollars. Here are the eight most important lessons I learned, and you can do it too."

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Table of Contents

1. Investment Cycle: Holding vs Doubling

Before you invest in a project, ask yourself:

Am I investing in this NFT for long-term holding, or am I just looking to double my investment in a short period?

The NFTs you want to hold long-term should be the blue-chip NFTs that are extremely unique within the industry <3%; the rest of the NFTs are bought to double your investment >97%. Out of over a hundred NFT projects I've doubled in, I only consider three of them as blue-chip.

It's crucial to determine whether you want to HODL or double your investment before buying an NFT. While the NFT you hold long-term may eventually double, an NFT bought for doubling will never turn into a long-term hold. Why?

Because NFTs are something you fall in love with once you see a bunch of pictures, known as the "mere-exposure effect" in psychology, where you tend to develop a preference for something simply because you are more familiar with it.

Note: The "mere-exposure effect" is known as the "mere exposure" or "exposure effect," where people tend to develop a preference for something they are familiar with, such as text, images, or sounds, similar to the psychological basis of developing feelings over time.

The mindset of "HODL" and "doubling" is completely different. Doubling involves considering high speculation for short-term gains, looking for projects with aggressive marketing tactics and high trading volume; HODL involves basic knowledge about the development team, community, and product.

2. Lifecycle of NFTs

Most NFTs go through a typical lifecycle in the secondary market:

Minting announcement
Blind box phase
Unboxing
Initial hype
Cycle ends

Most trading occurs during minting and after unboxing, depending on the level of hype for each project. If your goal is to double your investment, you should sell at:

The peak of hype.
As early as possible (as projects have the potential to crash at each stage).

Prices typically peak during the blind box and initial hype stages. I sell off 60% of a project during the blind box phase, and if the project is terrible, I sell it all; the remaining 40% is sold during the initial hype stage.

If your goal is to HODL, you should sell at the end of the cycle. This may sound easy because you hold a lot of unrealized gains, but I sell off 25% of my HODL during the initial hype stage to bring in some flexible funds and keep a clear head, avoiding the temptation to sell with paper hands.

3. Blue-Chip NFTs

Blue-chip NFTs should possess at least four characteristics:

Outstanding team
Organic community
Beautiful artwork / practical NFT
Legitimate strategic partnerships
Holder distribution

A. Excellent Team includes top artists, software engineers, marketing teams, with high execution capability, community engagement, and an understanding of how the NFT market operates, like AZUKI.

B. Organic Community signifies a community that grows naturally. Three ways to differentiate:

An organic community starts with subtle growth and then explodes; a network marketing community grows rapidly from the start.
In an organic community, discussions focus on the project's quality, while in a network marketing community, the focus is on price.
The influence of an organic community extends to various unrelated individuals; check if their followers are interconnected. Network marketing communities come from interconnected groups.

Bored Ape Yacht Club is a great example of an organic community in the early stages.

C. Beautiful Artwork / Practical NFT: Look for NFTs with tangible applications like games or airdrops, high-quality art, or meme elements; AZUKI features stunning art, while sartoshi's mfer is highly meme-worthy; RTFKT Studios' Clonex not only has exceptional artistic qualities but also offers airdrops and continuously updated high utility.

D. Legitimate Strategic Partnerships: The partnership itself may not hold much significance, but it serves as a strong market signal and keeps the community robust. NIKE's acquisition of RTFKT Studios broadened the project's roadmap. I often hear, "If it weren't for the collaboration with NIKE, I would have sold by now."

E. Holder Distribution: Simply put, most people need to HODL for prices to rise, especially whales. Visit Etherscan to view the top holders list for your NFT project and see if they are diamond hands.

4. Never Hold Derivative Projects Long-Term

Mainstream projects like Bored Ape Yacht Club, Cool Cats, AZUKI, and Clonex have many derivative copycat projects that can easily make you think, "This looks just as exquisite as the original, I'll HODL long-term."

Never do this. Derivative projects are usually ideal for quick doubling and should be sold during the blind box phase. They are definitely not suitable for HODL. In conclusion, beware of the mere-exposure effect and rampant network marketing.

5. Tools

Tools are crucial, especially for minting where speed is essential. I recommend downloading the older version 9.8.4 from Metamask's Github as it has old gas-gwei settings that make it faster than using the newer version. The next level would be bots, but I don't use them.

Reminder: Do not uninstall Metamask haphazardly; ensure you have backed up your private keys and seed phrases.

For all trading volumes, minting alerts, rarity, floor price, historical charts, I recommend:

Moby, NFTNerds
For rarity checks: Rarity Sniffer
For floor price checks: gem.xyz

Knowing the project's minting date is key to getting in early, reviewing its minting quantity and conducting due diligence (DD). Typically, you will have your own brief review mechanism because time is crucial when dealing with new project minting.

6. Do Not Trust KOLs, Focus on Creators

With few exceptions, KOLs have one goal: "To profit from followers and fans." For this, you can follow zachxbt's tweets. KOLs are indeed related to projects, but don't follow them; instead, leverage them. See who these KOLs are following and pay attention to any new creators entering the NFT space. Focus on these creators and get in early.

7. Track Wallets

Trust through verification; check the distribution of a top project's holders on Etherscan, such as AZUKI's: https://etherscan.io/token/0xed5af388653567af2f388e6224dc7c4b3241c544#balances

Identify these top holders and set up alerts for their addresses on Etherscan.

8. NFT Macro Cycle

In addition to the lifecycle of individual projects mentioned above, there is an NFT macro cycle, which is key to profitability. You must increase risk early and reduce it later, ideally having the largest holdings during the early Start Narrative phase.

Predicting the narrative structure behind projects and market responses is the most challenging. If it's too easy to predict, the risk also increases. Most of my profits come from the sudden surge of blue-chip NFTs and the chaotic trading of numerous derivatives.

The most crucial aspect is timing your exit. Reflexivity is your biggest friend and enemy. Market bubbles burst quickly; you will know when three new project mintings are scheduled one night, disrupting your sleep schedule entirely, signaling it's time to exit the game.

Establishing The NFT Edge account was inspired by The DeFi Edge, aiming to provide all NFT-related content. Other recommended Twitter accounts include:

NFT GameFi recommendations:

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