NFTexplained.info is a team of long term crypto investors who are well versed in the NFT space and aim to create the most valuable, educational content in this space.
While many NFT prices are going down, and the market is no longer exploding as it previously was, you may be upset and questioning what to do. In this article our team will break down the new opportunities that arise in a bear market as well as strategies for investing.
It should be noted that we are not financial advisors and none of our advice should be taken in a financial manner; as always complete your own due diligence and exercise proper financial hygiene.
An NFT bear market provides an opportunity to buy already established, blue chip NFTs for compellingly lower prices. During a downturn, it is likely a good idea to avoid highly speculative/risky NFTs, and make WETH offers. Many advisors suggest selling poor performing projects.
Blue chip NFTs that have well established positive reputations and are widely recognized as strong Web3 brands like Bored Ape Yacht Club have fallen enormously. If you have done your due diligence and think the price of blue chips will rise, it may be a good time to invest; however, NFTs are very volatile assets.
Many of these established NFT projects that were previously unavailable to many, may have reached a floor price that looks more promising. Ensure you research heavily before investing.
With fewer eyes on NFT projects and much less hype, it is likely a good idea to avoid investing in projects that are highly speculative or risky (e.g. those that don’t have a doxxed and promising founding team). More on identifying promising NFT projects can be found here.
In addition to avoiding speculative NFTs it is a good idea to avoid advice from people who have a following in this space as aping (purchasing an NFT that you have done little research on) into a project could result in a rug pull. A rug pull is where the founding team abandons the project and runs away with the funds from NFT purchasers. More on rug pulls can be found here.
Before we explain why sending WETH offers may be a good strategy, the team from NFTexplained.info will quickly cover what WETH is. WETH is simply wrapped Ethererum and is what allows a non native cryptocurrency to be used on any blockchain.
Our team mentioned sending WETH offers during a bear market as they are more likely to be accepted as there is less liquidity entering the market. Holders may be looking to exit the market for a myriad of reasons including being too exposed to these digital assets and an offer may be accepted below the floor price.
NFTexplained.info lastly mentioned selling projects that aren’t actively building or providing utility. Utility could be access to private events, blockchain-based games (where rewards can be earned), airdrops, new mints, and more. Our guide to utility can be found here.
It is likely a good idea to try and sell these lower level NFT projects before the hype has completely died down, especially when the founding team does not continue to invest in moving the project forward.
Strong projects will not be affected by a bear market and will continue to innovate as well as stick to their original roadmap and goals that they have set for themselves.
What Strategies Are Good In An NFT Bear Market?
Learn how to play an NFT bear market – be more conservative but continue to watch how the market develops and continue learning. Identify projects that hold a strong floor price (even during a downturn). Lastly, it is likely a good idea to purchase smart contract capable blockchains.
A lot can be learned during times where some would say the market is less exciting. Learning how to play this type of market will make you a better trader and more knowledgeable about this fast expanding space.
The second piece of advice worthy of consideration is finding projects that continue to hold a strong floor price. This means the project has a community that really believes in the project for the long term. Additionally, these types of projects are apt to increase in value more rapidly once the bear market has begun.
Continue to do your own research and find teams that are building out exciting projects and innovating in this space. Market conditions like these create new elements that the market has not seen before by people who are passionate about Web 3.
The final piece of advice from our team is to continue to purchase blockchains that have strong smart contract capabilities. Smart contracts are what allow transactions to occur without any intermediary (once all conditions have been met); this a major component of NFTs. More on smart contracts can be found here.
Blockchains like Polygon, Solana and Ethereum (amongst others) have strong smart contract capabilities and purchasing those blockchain native tokens will allow you to buy more NFTs in the future.
While NFTs are in a bear market, it is likely that the cryptocurrency market is also in a bear market as the two are somewhat related (although quite different). Accumulating these tokens will allow you to be able to purchase strong projects on those blockchains.
Now we will dive into some questions our team has received via Instagram and Twitter.
Is The NFT Market Profitable?
The NFT marketplace along with Web 3 is an expanding, multi billion dollar market. Many companies are making Web 3 plays; we have seen Nike purchase Clone X, which is one of the most popular NFT collections and many other reputable brands join the space. NFTs continue to be sold and resold for high prices.
What Can A Buyer Do With An NFT?
Aside from the ability to resell the NFT, a buyer will gain access to the utility provided which may include (depending on the project) access to real world events, access to a private community, access to airdrops, intellectual property rights to their NFT, physical goods, and more.
Will The NFT Market Recover?
The NFT market is quite volatile however the blue chip NFTs that have established themselves as a brand will likely recover from a market downturn. NFT projects that don’t provide utility and continue to innovate will likely fall to zero.
Are NFTs Still Popular?
While the overall hype and media attention NFTs receive varies from time to time, NFTs still remain popular. NFT holders which often gain access to a private community continue to remain active and involved.
Are NFTs Dying?
NFTs are likely just getting started as more and more venture capital has been invested in NFT native companies. Innovation in the space keeps increasing and blue chip projects continue to provide utility. NFTs have also begun to infiltrate other markets like the aviation industry amongst others.
More on the blockchain and NFTs relation to the aviation industry can be found in our team’s article linked here.
Are NFTs Crashing With Crypto?
NFTs are closely linked to crypto so when one goes down the other is likely to as well. This is because the price of an NFT somewhat follows the price of the blockchains’ native token (e.g. a 2 ETH NFT may continue to be 2 ETH however the price of ETH may rise or fall by 50%).
Additionally, the majority of NFT buyers are those who hold cryptocurrency and are already familiar with the blockchain. These cryptocurrency holders often diversify and invest in NFTs when they have a surplus of cryptocurrency.
When the price of cryptocurrency falls, many are likely to simply hodl their crypto instead of investing in NFTs.
The NFT space is always changing and the technology is quite new. Our team is incredibly excited to see what will happen as time passes. To get the latest news in this rapidly evolving space, follow our team on Instagram & Twitter!
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