TL;DR
- There are multiple factors to consider when purchasing NFTs, including your capital, the project’s background, and the overall market situation.
- A founding team that is doxxed provides more trust and transparency than a team that doesn't.
- If the NFT project has a strong community, it will help them power through tough market conditions.
- Projects that offer things that are available in the market usually lackluster than those with new innovative ones.
- Projects that are highly liquid will attract more investors than a project with little to no liquidity.
- A good indicator that an NFT project will pass the test of time is during a bearish market as the bears will weed out projects that do not make the cut.
NFTs have been on the rise over the last year, as collectors and companies alike are starting to take notice of the capabilities, returns, and overall potential of these tokens. Most notably, the Bored Ape Yacht Club (BAYC), a collection of 10,000 unique Bored Ape NFTs or digital collectibles living on the Ethereum blockchain, were sold for just 0.08 ETH (or $200 at the time). Today, one Bored Ape could be worth 77 ETH (nearly $150,000), and that’s not even including the free NFTs and $APE tokens that BAYC holders got as a reward.
Not every project can reach the heights of BAYC, but there are definitely some good options available in the market, and some that are yet to be released. With that in mind, how exactly do you determine which NFT should you buy?
How much should my first NFT cost?
There are different price ranges for different NFT projects, and everybody’s budget is quite different from one another. Some are ready to spend over 6 ETH on well-established blue-chip collections like Doodles, RTFKT’s Clone X, Azuki, and Moonbirds, while others are only starting out with less than Php 20,000.
If you have a larger capital, diversifying into some blue-chip collections could be a smart move but for beginners with limited capital, it may be wiser to capitalize on projects that are giving out whitelists (as these give you pre-sale access) and on free mint projects (meaning you only pay for gas fees).
How do I buy an NFT?
There are 3 main periods to buy an NFT:
- Pre-sale - For whitelisted members to mint their NFT first (Prevents Gas wars)
- Public Sale - Sale open to the public via different sale methods like Fair Dutch Auction or Pre-Mint Raffles
- Secondary market - Purchasing of NFTs via marketplaces like Opensea, MagicEden, and Mintable.
The pre-sale period allows all of a project’s whitelisted members to mint their NFTs without any issues of a gas war (in most cases).
The public sale period takes place after the pre-sale, and often takes form in a variety of methods, some projects utilize the Fair Dutch Auction method, where the price lowers at a certain time interval, with the difference between the price you paid and the final price being returned to you at a later date. Some would use a PREMINT raffle, where you register your wallet for a chance to mint the project during your specific mint period.
Lastly, secondary market sales can take place during and after the pre-sale and public sale periods and is your best option if you don’t have access to a project’s pre-sale or don’t want to participate in a project’s public sale. If you want to make a sound investment, in all of these scenarios, you’ll need to look into the project’s team, the community sentiment, the roadmap/utility, and the liquidity.
What makes a good NFT project?
Founding Team
There are different kinds of teams in the Web3 space, as some teams are doxxed (non-anonymous) while others aren’t. In a doxxed Team, you’ll be able to find credentials about the founding team like their qualifications, previous work experience, Web3 background, and much more.
If the founders have worked in the industry before, there’s a better likelihood that they have a more profound understanding of how to run a project. For example, Doodles’ founder, Jordan Castro, previously worked at Dapper Labs, one of the first companies specializing in Web3, and look at where they’re at now! On the other hand, it can be a bit more challenging to evaluate projects with teams who are not doxxed (anonymous), as there is often a lack of personal details offered by these individuals.
Having Strong Community
This refers to how the Web3 community feels about a certain project as public support is one of the key drivers of its short and long-term success. This can be evaluated by spending time in the project’s Discord community (and even other communities that talk about various projects), checking out the project on Social media like Twitter and Instagram, and getting reviews of the project on other media sites. This applies to all projects regardless of what sale phase it’s in.
When people have nothing to say but positive comments, these can be bullish indicators of the success of a project. However, when there is a lot of FUD (fear, uncertainty, and doubt) going around, you might want to be cautious and carefully examine the root causes of the FUD, as there are times when people FUD projects simply to get a better entry, while in other cases, that FUD is justified by the team’s suspicious activity.
Having a Roadmap
Many projects often have the exact same ideas for their project, the vast majority want to release merchandise, staking/burning for tokens, Metaverse utility, In Real Life (IRL) events, and brand-building.
The challenge here is looking for projects that offer something unique and innovative that the market hasn’t seen before, but at the same time this has to be tangible and feasible, otherwise, their roadmaps would easily be seen as a scam.
For beginners, established projects with launchpads could be a great help to kickstart your journey, as these projects would offer whitelist spots for more projects and could help you build up your portfolio. These communities also tend to share alpha (or helpful first-hand information) regarding what are potential buys and good investments, so there’s much utility in holding a project like that.
Liquidity in the Secondary Market
Imagine purchasing an NFT and not being able to sell it because no one is buying it for various reasons, hence liquidity in an NFT project is really important.
A project with high liquidity will allow you to sell or buy an NFT easily as compared to a project with lower liquidity. At the same time, high liquidity and sales volume can also move the floor price upwards, and this strategy is often used by experienced volume traders, who monitor sell walls and the number of NFTs listed. However, volume trading typically only works for quick flip projects, because once the volume has dried up, some projects end up going to zero as the demand becomes non-existent.
There are some cases where a project can be good but has sales only every now and then, which is often the case with blue-chip projects that have much higher prices. However, if a project is truly as good as believed to be, then it’ll only take a few catalysts to take that floor price even higher and just depends on the execution by the project’s team.
Market Sentiment
As of August 2022, the NFT market is currently more bearish than bullish considering how low sales volumes have been in comparison to last year’s highs. Back in early 2022, you could get whitelisted for projects like Hapebeast and Invisible Friends and sell them later on for 8 to 10 ETH.
In current times, such opportunities are nowhere to be found, and many projects often fail to complete their mint or “Mint Out” which results in the team pivoting the direction of the project and some even opt to refund their holders and close down the project.
Having said that, bearish markets have their benefits like filtering out the strong project from weaker ones. Projects with continuous strong community support, a vocal and qualified team, innovative utility, and a good amount of liquidity will stand the test of time in the web3 space.
Some blue-chip projects may have secondary collections that allow you to gain exposure to their ecosystems at a much lower cost, this is exemplified by buying into the Mutant Ape Yacht Club (MAYC) over the Bored Ape Yacht Club (BAYC), as the price of a Mutant Ape is 1/6 of a Bored Ape’s. There is reason to believe that projects with all of those qualities will end up making a comeback once the NFT market is bullish once again, but for now, it’s a great opportunity to learn more about all the facets of Web3.
How to buy my first NFT?
Your first NFT purchase may not be the best right away, but as you continue to gain more exposure in the space, you’ll slowly be able to build your way to the top. To start purchasing your NFT, you will need some crypto, depending on the marketplace you use, this could be Solana(SOL), Ether(ETH), or even Polygon(MATIC).
Each marketplace has its own pros and cons, a different selection of NFTs, and also different features available. To get started on your NFT journey, you can purchase ETH from coins.ph in 2 simple steps:
Step 1: Log in to your Coins account and make a cash-in. You can use bank transfer and e-wallet options to top up your PHP into your wallet.
Step 2: Tap Crypto and select “ETH” from the drop-down menu to convert your PHP to ETH.
Once you got your Crypto, you can transfer it to MetaMask, and using MetaMask, you can explore different NFT marketplaces like Opensea, Mintable, Rarible, Magic Eden, and much more!
Disclaimer: The information and publications in this article are not intended to be and do not constitute financial advice, investment advice, trading advice, or any other advice or recommendation offered or endorsed by Coins.
Get your crypto journey started with Coins.ph
Coins.ph is regulated by the Bangko Sentral ng Pilipinas (BSP) and is the first-ever blockchain-based company in Asia to hold both Virtual Currency and Electronic Money Issuer licenses from a central bank.
Sign up for a Coins.ph account now to start trading OR download the Coins.ph app. Once you have verified your account, you can convert PHP into the cryptocurrencies of your choice.
Start trading your favorite Crypto on Coins Pro with fees as low as 0.05%!
Join the Coinmunity
Connect with like-minded crypto enthusiasts! Be the first to learn about our news and campaigns.
Join us on:
- Twitter: https://twitter.com/coinsph
- Discord: https://discord.io/coinscommunity
- Telegram (Announcements): https://t.me/coinsph_announcements
- Telegram (Community): https://t.me/coinsphfilipino
- Instagram: https://www.instagram.com/coinsph/
- Facebook: https://www.facebook.com/coinsph/
