By Codie Sanchez THE HUSTLE
As I have said multiple times the ONE ASPECT of the crypto space I have travel wrapping my mind around in the NFT market. There is no question that the Metaverse is real and will provide real opportunities, some of those will probably be within the NFT world because they have utility, but not yet.
As I stated in the article a couple of months ago. 99% of NFT project must fail, right? I understand the market for NFT’s with utility or those attached to a sports team or pop culture star, but pictues of annimals and insects, I don’t understand, do you?
| A framework for buying dumb things |
We all do it. I regret about 97.3% of my purchases from 2007-12, including a miniature Picasso. Weird flex since it looked like a toddler drawing and was the size of a business card.Speaking of dumb things people buy, NFTs. Looks like the market might now agree:Sotheby’s pulled a big NFT auction NFT trading volume has tanked NFT search volume has fallen off a cliff. The numbers are the numbers! |
Like every other speculative bubble in history…
… most will dissolve into nothingness and some will mint a few billionaires.
What this piece is really about is — when do you decide whether something is, in fact, capital-D Dumb to buy? This seems especially important today.
Here’s my framework to decide if my Amex needs to come out:
- If I don’t NEED it but WANT it, I allow myself 30% of my total earnings for play. The rest of it must go through the gauntlet (30% fun, 70% financed).
- If I buy X and hold it for 1-10 years, does it earn? Does it return? If so, buy (Earn + Return = Spend).
- However, if I hold for 1-3-5-10 years, does it not earn or return but instead go into the rubbish bin? Not a buy (Hold – Earn → Rubbish = Do not Spend).
This is not rocket science
But our lives are created by the questions we ask. So, ask yourself, Are those $300 NFT shoes going to be more valuable than investing $300 in learning something? Which one will be rubbish, literally or metaversically (that’s a word, right?)?
My guess is you’re better off skipping the NFTs, putting money into fractionalized real estate, or investing in yourself.
But what do I know? My friend Tom Osman made millions on a JPG rock. Probably repeatable.
NFTs Continue in Freefall 3-11-22
I am trying to wrap my mind around the future of NFT’S more importantly NFT Technology that will allow us to sell shares in rare collectibles or even a home or apartment building, that is where I see the future. I am still having trouble wrapping my mind around a JPeg Image selling for tens of thousands of dollars.
Now let’s talk about the state of the market since The Otherside land mint. Spoiler alert: It’s not pleasant.
As the cryptocurrency market at large experiences its own freefall, NFTs have also experienced dramatic drawdowns. The Bored Ape Yacht Club floor is down 60 ETH from its all-time high of 150 to 90 ETH. The Mutant Ape Yacht Club is down 50% from their all-time high, Moonbirds the same. Doodles and CloneX have experienced moves down of 25% each. $APE has crashed nearly 70% since The Otherside mint, from its peak of $26 down to $9.
Contrary to others, I don’t believe this NFT drawdown comes as a result of the bear market in technology stocks and cryptocurrencies. NFTs have shown multiple instances of being able to survive larger pullbacks.
I think the biggest reason we’re experiencing this drop-off is because all roads lead back to BAYC. We’ve experienced a number of short-term catalysts in Bored Apes that have showered their owners with money — $APE and Otherside land in particular at peaks were worth over $300,000. Now that these long-anticipated catalysts have happened there isn’t anything else coming up the pipeline for the Apes, at least not soon. As a result, Apes are selling and people don’t have a reason to be buying. We’ve seen this play out after every single major airdrop in the market.
And when people start seeing Apes move down (or up), the rest of the NFT market follows. Of course, weakness in higher-risk markets at large as well as questionable macroeconomic conditions don’t help the case for NFTs, but I don’t think we can say quite yet that direct correlations exist.
Roundup of the Rest
There are a few more things in NFT news we should highlight before we leave today.
First, there was the groundbreaking news that one of the founders of Azuki, a project widely considered to be a staple of the mid-cap NFT market, revealed himself to be the founder of previous projects that have been rug pulled, including Phunks, Zunks, and Tendies. A rug pull, if you’re unfamiliar, is when a founder starts a project, sells it out, takes the proceeds from the sales, and stops all development on the NFT, essentially sending it to zero.
The market reacted terribly to the news, sending the Azuki floor to 14 ETH, down over 50% from its all-time high of 31 ETH on May 3. I’m eagerly anticipating what Azuki’s future will look like, but I don’t see many signs indicating that it will be too bright.
Elsewhere, Moonbirds announced the specifics to their nesting mechanics. The project received quite a lot of flack over the fact that nesting level would not be restarted when a Moonbird changes ownership. For example, if I were staking my Moonbird for one year, and you bought it from me, you’d receive that Moonbird with one year of staking attached and be able to pick up where I left off as soon as you stake it, including all the future rewards that come with that. The reason this was so controversial is because it effectively reduces the competition of nesting; if everybody will more or less be at the same level, what’s the point of doing it at all?
The team took note of these criticisms and made some changes. Now when a Moonbird changes hands, it will be reset to its most recent tier achieved, as opposed to maintaining all of the time nested as before. Although this still isn’t perfect, it’s definitely an improvement.
One final quick note about the market — the NFT that has held up the best throughout this dip? CryptoPunks. Their floor has dropped by roughly 16%, markedly higher than all of its equivalent counterparts. Are these the foundations of a new narrative beginning to form? That is something we will continue to track…
Let’s hope for a greener week over the next 7 days. If not, our focus remains the same — keeping up with the market and continuing to learn, because prices can move up and down, but our competitive advantage will always remain the same — our knowledge
