Non-fungible tokens (NFTs) have grown popular within the last two years, providing a fresh investment option in the cryptocurrency market. There are dozens of new NFT projects daily, each promising potential investors juicy benefits. However, many of these projects are created by individuals who are only there for the money; hence, many of these projects can not stand the test of time. As a result, we have collated essential tips to assist you in your NFT investment journey.
Invest in a Strong Community
Before investing in any NFT, it is crucial to consider its community strength. NFTs with a strong community appeal are usually good choices for investment. For example, if a new NFT project penetrates the market to have hundred thousand real and active community members, and the NFT collection is expected to be ten thousand items, it means that the NFT demand will outweigh the supply by ten times. As expected, with increased demand, the NFTs price will increase, and then you can choose a calculated time to take the profit on your investment.
The most important communities to check out are Twitter and Discord. It is vital that the NFT project has a lot of dedicated and invested members, who are interested in the success of the project, and not just “bot” members or fake members. Many NFT projects buy followers on Twitter or use fake members on discord; however, this is not difficult to decipher.
The onus lies on you to discover how genuine these community members are by comparing the ratio of followers to engagement and quality of conversation. Hence, a community of fifty thousand Twitter followers with a paltry 100 likes after a major announcement should send a signal that the follower count is not to be trusted. Similarly, a discord community of members majorly asking questions like “when moon,” “when mint,” and not talking about the roadmap or other important metrics should not be taken seriously.
Hence, to know if an NFT community is worth investing in, be a part of it, observe the engagements, and make an informed decision.
Roadmap is Important
The roadmap of any crypto project is utterly important in determining its success. It involves all strategic plans to increase the value of an NFT within a specific timeline, outlining all goals and the objectives planned to achieve them.
A worthy NFT project will have an inviting roadmap; this roadmap can give insights into when the NFT demand will peak; hence, you can determine when to sell your NFT.
Some NFT projects don’t have roadmaps at all; this is as good as saying they are clueless, have no plans, and are only interested in riding on hype — you should be wary of such investments. In the same vein, some NFT projects plagiarize their roadmaps just to satisfy potential investors.
As a result, it is crucial to scrutinize the roadmap of an NFT project, its genuineness, and its feasibility before making major investment decisions.
Look Out For Whitelist Mint
Many NFTs usually launch their minting process via a whitelist. After checking out an NFT project to confirm community strength and roadmap, then you can be on the lookout for getting a whitelist spot. Getting a whitelist spot may be difficult, depending on the requirements; sometimes, the requirements are simple, like inviting new members and remaining active in the community. However, at other times, getting a whitelist spot is totally down to lottery.
Whitelist spots help investors get in early, even before the public, offering much more profitable NFT investments. For example, the whitelist mint price could be 0.1 ETH, while the public mint could start at 0.3 ETH. This means that at the end of the whitelist mint period, the worth of the NFT would increase by 200%. With a very engaging community, the NFT will remain in demand, and the investor can make much more money.
Know when to Buy/Sell
The beauty of any investment is knowing when to get in and out. This often marks the difference between profitable and non-profitable investors. It is usually advisable to buy NFTs after confirming a bull run. For example, if you buy an NFT for 1 ETH at $2,000, and a bull run is confirmed, making the price of 1 ETH $3,000 in a month, then you’d still be in a profit, even if the price of your NFT falls to 0.7 ETH. Conversely, if you buy an NFT and a bearish run is confirmed, then the worth of your NFT will reduce.
Similarly, it is important to sell NFTs at perceived peaks, especially if you are just an investor and not particularly interested in the art or long-term community membership perks. If your NFT investment is solely for the profits, it is important to buy when a bull run is confirmed and sell when the demand has peaked.
Furthermore, demand soars in bull seasons; hence, it is improbable that your NFT will lose value during a bull run. So, you need to conduct fundamental and technical analyses to see the overall market sentiments and use them to guide your investment.
Stake NFT for passive income
While waiting for a good time to cash in on your profits, you can lock them up in smart contract protocols to earn rewards, like in DeFi yield farming. However, it is essential to know that not all NFTs can be staked, so you should conduct adequate research before proceeding.
Find Rare NFTs
When investing in an NFT collection, it is vital to consider its rarity. When dealing with digital collectibles, rare means valuable; hence, it is essential to prioritize NFT collections with high rarity scores. Typically, many more people will be interested in a rare NFT, leading to increased demand; hence, early collectors can make significant profits.
Don’t ignorantly buy into hype while looking for your LAMBO project. There are hundreds of thousands of NFT projects in the crypto space, and only a small percentage is truly worth investing in. Remember that all investments carry significant risk, so you should do your own research and never go in blindly.
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