(Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)
Gm frens, we hope you all had a lovely week in the metaverse. There seems to be positive vibes in the air, I’m sure you’ve been smelling it too. After what’s been an ice cold couple months in NFT world, the vibe on Crypto Twitter has finally starting coming back to itself with several whales making sizable purchases in blue chips and other solid projects. Breathe anon, wgmi.
Macro Update
As we start to transition into what many might consider the height of this super cycle, we thought it might be helpful to share some high-level learnings we’ve picked up along the way in NFT land. These are evergreen insights, obvious to many but hopefully helpful for many as well.
Most people who are panic selling low-quality projects are basically listing for nothing (.0001 eth) because they don’t want to pay the gas fees associated with accepting a bid in wETH. At times, you see somebody paying more to offload the NFT (funny to watch). With all hope seemingly lost, this feels like a clear sign that we’re near the bottom.
One of the core learnings around buyer psychology in NFT land is that on-chain jpegs are virtual flexes in a world where life is increasingly spent online more than IRL. For most of this bull run we’ve seen the majority of projects set their mint price at .1 ETH or lower, in order to attract the average NFT buyer, and then hope to earn the majority of revenue from the project on re-sale royalties. We think that in the very near future, a new tier of PFP projects will start minting around the $1500-$2000 USD range. These will be deemed ultra premium NFTs and jump to higher resale values far quicker than most other cheaper projects.
A 1 ETH floor seems to be the zone where an NFT project gets real attention. Any PFP project that has held above a 1 ETH floor few months should withstand whatever is to come going forward.
If a mint doesn’t sell out within 12 hours it probably won’t sell out at all. Panic sellers will immediately drop the floor 50% below mint price to bail and will enact a vicious cycle of panic selling.
People tend to overcomplicate things. With it becoming harder and harder to nail the next NFT winner, we’re reminded of the track record of betting on BTC/ETH vs alts. Yes you can hit your 100x on an alt, but most people would be better off simply holding on to their ETH. Same thing applies to NFTs – if you’re looking to ape in, it’s way smarter to jump into a higher quality project (if you can afford it) vs spreading yourself thin on several unreliable mints. Things may revert back overtime, but right now the blue chips are holding strong while everything else dumps.
Twitter NFT verification is going to be way bigger than people are likely giving it credit for. Seriously. Probably deserves an entire blog post. Punks and apes will become the new blue check marks.
We have a lot of normie friends who are pretty anti-NFTs but have a decent amount of crypto. Said they’d be willing to explore the market if it was easier to access on their phones (essentially through Coinbase). The sheer volume added to this space when Coinbase (or whoever improves the UX quickest) enters, will open the flood gates.
The metaverse is now. Thought about this the other day. We’re already spending more time in front of a screen (TV/Phone/Computer) then we are IRL. At the end of a long day, most people move from their work computer to go watch Netflix. Even working out has been moved in front of a screen (Mirror, Peloton, youtube classes). While we may not be sitting around in a circle with our VR headsets (yet) the majority of our time is spent in the digital world, without us realizing. The metaverse is here and most people have been too immersed to stop, look around, and recognize what’s really happening.
Mint Purgatory For Good
We copied and pasted this awesome thread from our friend @cypheralgos which pretty much sums up the supply and demand for NFTs right now. Highly recommend giving him a follow. Check out this alpha from August.
“You're seeing the aftermath of this now, where everyone blew too much $ETH on projects that appeared scarce but were actually part of an infinite supply.
So floors fall because unlike these projects, $ETH actually is scarce.
Next phase imo is a maturation period for NFT projects. You can no longer get free money by running a mint. The concept/art has to be top tier. This is obviously good and represents a positive shift.
People understand that they can't blow their $ETH on anything now and call it an investment. Gotta do more digging. More research. Game gets a little tougher on all fronts.”
We agree with everything said here. Also, now that new mints are having trouble selling out, the upfront costs of a new project are potentially not worth it for scammers, meaning less scam projects in the space as a whole. As Cypher says, this is bullish on a long-term time frame for the overall NFT market. With more legit projects comes more normie adoption.
Punks & Apes Update:
Punks and Apes had their first real floor dip this week. There’s around ~20 punks sitting under a 100 ETH floor right now, with Apes remaining around 32 ETH. While we haven’t “checked the chain” in depth, after a few scans of the punks listed we noticed a few are being listed at a loss (in ETH terms not USD) which are ultimately $100k+ losses. While we don’t think this has much to do with the overall health of the NFT market at the moment, this is around a 10% drop and should be taken seriously. In our opinion, anyone snagging a punk under 90 ETH is getting a steal if willing to diamond hand long term.
Chubbi Time
Our favorite quote this week comes from the Chubbicorns discord, which sold out 2.5 hours after the dutch auction hit a .09 mint price($500 USD+ with gas).“Chubbifrens is the catalyst of the next bull market I can feel it LFG!” The image below sold for 6 ETH or ~27k USD shortly after the mint.
The dutch auction started at a .69 price with mint dropping .05 every few minutes until it hit a bottom price of .09 like we just mentioned. If you were like us, patiently waiting to mint, you also noticed how the number of pfps minted barely decreased for around an hour. Things looked bleak, but once the mint price hit .09, the number started to increase rapidly. A few things to note on why we think this was a huge success. Projects have been having a lot of trouble selling out recently. Many new mints, you may have noticed, drop the collection from 2000-5000 total and keep prices around .03 - .05 ETH. Many of these projects don’t sell out and get stuck in purgatory as the floor price drops below mint. Chubbifrens, however, in the midst of a brutal NFT bear market where nobody is minting anything, sold 8888 in under 2.5 hours.
While we can go into all the reasons we love this project long term, this should generally make anyone involved in the NFT space smile. For the first time in what feels like forever (~6 weeks or so) it feels like a bottom is forming. There are so many bullish catalysts on the horizon, especially with Coinbase on the verge of bringing millions of new people into the space. It’s still day 1.
New Mints
While we’ve noted that new mint winners are tougher than ever to identify, the title of this newsletter is Mint Calendar, so we’ll include some mints below that caught our eye and have the potential to moon. Note that we’re primarily bullish on Crypto Pugs and Dirty Dogs because how could you possibly bet against dog-themed anything right now with SHIB being the best performing asset over the last 12 months by a significant margin (😂).
As always, do your own damn research.
That’s all folks! Hope you all enjoyed this week's addition. Feel free to shoot us a DM or email for what you’d like to see more of! We’re super active on twitter so tag us in anything interesting and if you’re feeling friendly feel free to share this with your NGMI newbie friends so that they can make it. Have a wonderful week!
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Disclaimer about sponsorships: We’ve been getting A LOT of dms about sponsorships and upcoming drops. Many are NGMI but a few projects stood out and have teams that we’ve taken the time to speak with and are excited to share info on in the near future. If you're launching a new project and are looking to work with us on promotion and/or consultation on how to plan a successful drop, feel free to slide in the DMs in Twitter.