March 14, 2022

Trading: Investing In NFTs To Make Money

Trading: Investing In NFTs To Make Money

How Do I Invest Capital To Make A Profit In NFTs?

There are many ways to invest capital to make a profit. The traditional investing methods involve stocks and shares, real estate, and high yield savings accounts with financial institutions. Cryptocurrencies based around blockchain technology have become a popular vehicle for investing and trading in recent years. NFTs, like cryptocurrencies, revolve around the blockchain. NFTs became well known in 2021 and have become a fashionable investment and trading avenue for those interested in finance, technology, and cryptocurrencies.

Like all investments or any other form of buying and selling, there is no guarantee of profits with NFTs. While there is a possibility of making money, there is also the chance of losing; the more informed the investor, the greater likelihood of making the right calls. With this in mind, let's look at trading NFTs. Speculators buy NFTs because the price will increase and sell as the market price rises. People purchase new projects or ones already launched and established.

Buying And Flipping NFTs From New Projects

Many "paper hands" buy into newly launched projects and sell immediately for a profit. While this was easier in 2021, with the massive number of projects launching daily and the lack of long-term vision from most projects, this strategy is not straightforward. Many people buy NFTs only to find the project fails to sell out, and their NFT has decreased in value. With little chance of the price of the NFTs increasing, it's a losing situation.

Due to the vast number of projects launching regularly, it has become difficult to track down great projects. And competition from other investors makes it challenging to obtain whitelisted spots for good projects to enable early purchase. 

Top collections command a considerable demand. The project owners become picky about who makes the whitelist to purchase during the presale period. Without access to the presale whitelist, public sale purchase is the only option. With the vast competition, the chance of buying in the public sale is slim. People can become aware of good projects through alpha Discord servers which carry out all the research on behalf of the investor.

Websites listing projects coming to the market and information from Twitter is an excellent way to find project launches. Due diligence is required to ensure the project is worth pursuing. For example, checking the project is doxxed, has a big enough community, and has long-term viability utilities.

Buying And Flipping NFTs From Established Projects

Buying into established projects is another trading strategy. But ready access to more significant sums of capital is required. On the Ethereum blockchain, NFTs, which were hundreds of dollars on launch, become thousands of dollars. This kind of capital is not available to everyone who wants to purchase. For instance, in the summer of 2021, it was possible to buy a Bored Ape Yacht Club NFT for ten thousand dollars; these NFTs became worth six figures and beyond within a few short months. 

The alternative is to buy on other blockchains such as Solana with lower prices. But Ethereum remains the number one blockchain, and all big projects focus on the Ethereum MainNet. Many projects on blockchains such as Solana become rug pulls where the founders end the project and disappear with the investor's money. Some allow a slow rug to take place, the developers lose interest, and the project comes to a halt. The price of NFTs falls over the weeks and months; the investor has a loss-making asset. 

Buying any NFTs from projects destined for success is the aim of NFT traders. Investors should ensure a steady trading volume; others are buying the assets, it's no point buying NFTs where the price is high, but trading volume remains low. 

Rarity traits are something people should investigate. These NFTs are likely to increase in price significantly higher than common NFTs. Looking at NFTs near the floor price but with rarity, traits is a good idea. These are incorrectly priced and will see a more significant jump in price as the value of the NFTs and project rise. 

Wrapping Up

NFTs have become an integral part of the blockchain ecosystem; people wishing to trade NFTs for profit are the most significant contributor. The investor will make better trading decisions when possessing greater knowledge and information. Spending time studying the market and becoming more aware of the NFT space is a wise idea. Focusing on one successful project and appreciating all the NFTs and rarity attributes within the collection might be an avenue to pursue. 

Note: This article is not financial advice. Trading NFT or any investment is not risk-free; people should always do their own research before investing. And remember, never invest money you cannot afford to lose.