In Part 2 of the information series, we explained how people are making money in the NFT space. Now we’ll go a bit deeper into the generative art collections and what makes certain NFTs more valuable than others and how you can spot the trends and profit from it.
TL;DR: Generative art collections have NFTs that are a ‘one of many’, the goal being to find the right project, and then to find the NFT gem within the collection.
Here are some factors to consider:
- Between different projects: There are thousands of NFT projects out there at the moment, with hundreds of projects being released each day, and very few projects retaining their value after the first 24 hours. You’ll want to consider: the reputation of the creators, roadmap promises, level of community engagement, marketing support, influencer support amongst others.
- Within the collection: Once you’ve chosen a collection to buy into, you’ll now need to identify which of the 10,000 NFTs you want to purchase. People will often buy based on desirable traits (e.g. laser beam eyes), rare attributes (e.g. wearing a crown) and simply what looks “cool”.
Some collections even have one of ones within a collection, being a rare NFT right off the production line.
It is a matter of supply and demand. You need to be selling an NFT that someone else desires; something that separates that NFT from all the others. In a collection of 10,000 NFTs, the presence of one attribute could be the difference between owning something worth tens of thousands of dollars, versus close to zero. As mentioned in Part 1 of our informational series, the key here is knowing that there are different types of collectors and traders out there, each with their own buying strategies, so it is a matter of projecting what they might buy, at what price, and getting the jump on purchases.
NFTs with specific traits
In simple terms, if you know people love laser beam eyes, and that’s their thing, then best to grab a few of those to flip. This might not be a good strategy if you’re trying to trade Laser Eyes Punks tho.
NFTs with combination of traits
It is similar to buying a Lamborghini where there is a limited production for each model, each with different configuration combinations: Different car colours, interior colours, automatic or manual, coupe or convertible, performance packs, signature editions, manufacturer years etc. Some variations and configurations are more desirable than others and command a higher price. NFT collections are similar, in that some NFTs are more valuable than others. This is something we’ll go into depth in a future edition where we’ll also provide tips on identifying rare attributes and sharing tools that can help you find that diamond in the rough.
Market trends
Large opportunities come when there is a project that has the potential to unlock entire markets, some market trends to look for:
- New markets: Entire cultures (e.g. Chinese) PhantaBear was arguably the first to have a major breakthrough within the Asian market, bringing NFTs to the East through Mando Pop legend Jay Chou. A project being led by the legendary Chinese pop star, who took his following into the NFT market, brought it to the mainstream.
- Market segment appeal: World of Women has been a monumental gateway for women to join the market, with much support from the Gary Vs of the world who saw the new wave of collectors coming from this market segment.
- New comers: There are new collectors joining in the fun, and they’re buying the classics. These cashed up traders are bringing new money into the space; adding their names to the list of owners of the original (and now highly coveted) NFTs, like: CyptoPunks, CryptoKitties, and BAYC. Eminem recently purchasing his own Bored Ape Yatch Club for USD$462k for the ultimate flex. This is similar to people buying up classic cars i.e. a 1908 Ford Model T just to be part of the industry’s history.
What do you think will be the next trend that will be valued by NFT collectors and traders?
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In Part 1of the NFT informational series (where we shared some basics of what makes an NFT valuable), we touched on the different types of traders involved in NFTs. Next we’ll go into more detail, in Part 4: The People and Teams involved in the NFT trade.
