The term NFT or Non-Fungible Tokens is one of the most used terms recently in the digital arena. In fact, it was one of the most profitable investment markets in 2021. We saw NFT collectible prices break all the records, gaining traction even on social media. However, you cannot invest in an NFT without any strategy and expect it to trend.
So, whether you’re looking for a long-term investment or a short-term flip, you must carefully plan your NFT purchase. We have put together some effective NFT investment strategies that primarily apply to NFT collections. Let’s get started.
- Purchase at Floor Price.
Floor price is a standard metric to measure the performance of an NFT collection. Floor price is the cost of the lowest-priced NFT in the entire collection. It gives an insight into the trading volume and activity of the collection holders. Floor price shows how the NFT collection as a whole is received by the community, which means that if the cost of the lowest-priced NFT is high, the entire collection is expected to perform well. Because of the value of the collection, the people can be willing to pay a lot more to enter the club and become a member. And this can be a good sign to invest in that NFT collection.
- Scrape the Ceiling.
NFTs are a form of art. And unique, colorful designs are the most popular NFTs. So, if you want to invest in something of high value, scrape the ceiling and find out the ones that are rare and coveted. This is because something outstanding is more likely to catch the eye of whales and celebrities, which can cause a dramatic rise in the NFT collection’s value.
- Google NFT Trends.
This NFT trading strategy is a good one for those who are new to NFTs. You can quickly Google and check if the market in question is still popular. A simple Google trend analysis will help you gauge the general sentiment of the public for the keyword you are analyzing. You can check the report to see the average number of searches for a topic. The search volume is scaled on a scale of 0 to 100 to determine how trending a keyword is.
- Create a Value Strategy.
By now, we have established that NFTs that are rare are priced higher than the others. Therefore, you must find valuable projects using tools such as Rarity. Rarity compares different NFT projects on the basis of rare characteristics. A single NFT in a collection may be higher in value than the others in the same collection because of its rarity. The tool helps identify those characteristics that make projects stand out.
- Discover NFT Scarcity.
Scarce NFT collections are likely to rise in value since the demand would always exceed the supply. All NFTs are unique, and each NFT collection may have several items with rare attributes. And even among the sets of different items, there may be several items far more valuable and expensive than the others. The key is finding the rarest NFTs so that if the NFT collection becomes popular, the rarest NFTs from the collection would have a higher chance of selling out at a higher price.
You can again use the Rarity tool to get relative information on the NFTs in terms of scarcity. And by adding up all Rarity Scores in terms of characteristics, rarity, and scarcity, you can get an overall rating to find NFTs that are performing well.
- Buy Multiple NFTs.
When we say ‘buy multiple NFTs,’ we mean buy multiple NFTs from the same collection. This is because even if you end up selling one from the collection, you would still have one or more to sell when the market rises. You cannot expect to get back in the club if the market skyrockets suddenly; you will simply lose the chance. So, to avoid any risk, buy some extra NFTs from the same collection, and you can even sell them at NFT minting events.
- Find Underpriced NFTs.
You can not only analyze the market trend and invest even when the demand for the collection is low. Instead, look for items that are now selling at prices lower than what they were bought. This means that if just 5 NFT items are priced at $300 while the rest of the collection as a whole is $600, it may not definitely be a good deal since the high-priced NFTs may originally be bought at a lot lower price.
- Invest Carefully.
Whether you’re investing big or all, the most important NFT investing strategy is to invest what you can afford to lose. The digital market keeps changing, and within a couple of hours, the value of the cryptocurrency can decrease by over 50% due to multiple factors, including regulatory actions. So, invest carefully when investing in NFTs.
A huge population still does not know much about NFTs and how the NFT market works. But as the market rises, more and more people would invest, increasing the value even further. So, if you’re looking to invest in NFTs, do it now. The earlier you are, the more profitable your investment will be.
Make sure to keep analyzing NFT market trends and updating your NFT investment strategy.
Author Bio: Akanksha Malik
Akanksha Malik is a content creator & digital strategist at Mesha – India’s largest investing club & online community where the world’s best investors gather to share ideas, discover fellow investors, invest in NFTs & crypto, and compete in challenges for real money. She develops content to share her knowledge and insights helping her readers stay updated with the latest in fintech & investments, as well as cryptocurrency trends and upcoming NFT opportunities. Apart from being passionate about her work, Akanksha loves exploring architectural sites and different local dishes during her travels.