Photo by Ben White on Unsplash

You might not be interested in NFTs, but it’s worth doing your homework on the underlying technology and what it’ll mean for all of us in the future.

Imagine if you had been a closed book when it came to Bitcoin.

Many of you who follow me are into the Cryptocurrency space and mainly involved with Bitcoin, which I’m very bullish about too.

It isn’t an either-or game for me. Both are great opportunities.

NFTs (non-fungible tokens) make sense.

You have an individual or founder driving value to their project, and if you have their token, you get a share of the economic upside of whatever demand or value they create when you support them.

If their project involves art or ticketing, the issuer can create a royalty in perpetuity which doesn’t happen when it’s a physical product.

It all comes down to your ability to find the best projects and the most capable founders. Or support people you like.

98% of NFTS projects will be bad investments, just like the ICO craze, which collapsed in 2018. And not too dissimilar to internet stocks in 2000.

You’d be right to sit there scratching your head, wondering why cartoon pictures on the internet were selling for hundreds and thousands of dollars.

Most of these projects were operated by first-time founders without business experience, looking to make a quick buck.

But some real business people are entering the space, and more are coming.

Kevin Rose
Guy Oseary
Gary Vaynerchuck

The underlying technology is profound, like the internet, which is still around today — you’ll have a handful of NFTs projects that become juggernauts. We’re talking Amazon, eBay and Disney, giants.

The NFT space may even have a larger market cap than Bitcoin.

Ok, I know what you think.

I’ve lost my mind.

Hear me out.

NFTs are contracts, and every interaction we have as humans involves a contract.

I mean, look at us now. I’ve got a Medium account. You have one too. We’ve both entered into a contract.

The technology is revolutionary. Think printing press. It’s that significant.

I got involved in NFTs early in 2021, which opened my eyes to a new world of possibilities. People are earning full-time incomes from NFT trading, and if you give me a chance, I’ll show you exactly how they’re doing it in a step-by-step guide.

Right now, NFT trading is at an all-time low.

People are overleveraged, and NFT sales volume on Opensea is down by 97.3% against all-time highs in 2021.

The amounts people earn entirely vary based on personal effort and market conditions.

There are, however, still inefficiencies in the market. If you put the effort in, you can still earn a substantial amount.

Here’s what you’ll need to know. We’ll dig deeper into each topic.

How to find up-and-coming projects
Understand buying and selling pressure
Are ‘whales’ buying the project
How to understand Secondary Sales Volume
Strategies to buy and sell miss-priced NFTs

Disclaimer — none of this advice involves using a bot.

How to find up-and-coming projects

An excellent site to search;

rarity.tools

At the top of their landing page is an “Upcoming” tab.

Under “Upcoming”, you’ll see the time and date each project is minting — the total supply of tokens and links to the project’s social media pages.

Join their discord

Twitter

The heart of the NFT community is on Twitter. You’ll find quick releases and news in the NFT space by following the right people.

For the best insight into the NFT market, you must follow the people below — I’ve linked their Twitter profiles to make it easy.

Understand Buying and Selling pressure

To understand how the market is feeling about a project.

You must use the following;

Discord
Twitter

You need to get a feel for potential buying and selling pressure.

It may indicate a diamond-handed solid community if you hear educated conversations around the project’s long-term value rather than the floor price.

And result in less selling pressure, pushing the price up.

The best way to gauge the sentiment of a project is by reading at least 50 comments in the project’s Discord and across Twitter.

These should all be red flags;

Significant parts of the community lack understanding of the project
Talk of manipulating the floor price by listing NFTs higher
Founders are talking about the floor price.

Are Whales Buying The Project

I wish this section didn’t exist.

The reality is the trading market uses more prominent NFT names and buyers in the space as a safety signal.

Hence why, more significant wallet addresses get spammy airdrops.

People also realise larger NFT buyers create higher trading volume in a project. So it’s worth at least tracking this.

The best site for this is

nftscoring.com

They do charge a subscription fee for ongoing insight.

If you don’t want to pay this, roll your sleeves up and look at what projects the big names follow on Twitter. You can even use the Twitter links I sent earlier in the thread.

How to understand Secondary Sales Volume

This is the nitty gritty.

You need a project with high secondary sales volume and fair market value when searching to buy and sell NFTs.

Here’s how you gauge fair market value.

Search for the project on Opensea.io
Check “Total Volume” — This is the total ETH volume.
Check “Items” — this is how many NFTs are in the collection.
Divide — “Total Volume” by “Items”
This will give you a strong indication if the floor price is under or overvalued.

Example:

Veefriends Season 1: Total Volume = 57,000 ETH Divided by 10,300 items in the collection = 5.5ETH

The current floor price is 5.4 ETH — so I can see the price is probably at a fair market value.

A couple of weeks ago, the floor price was 15ETH — had I run the exact maths, I’d have seen the market overpriced these NFTs.

Next is sales volume;

Click on the “Activity” tab — circled in red below.

Filter by the last seven days — in red below.

Here you’ll understand exactly how many daily sales there have been.

If there’s only a handful of sales each day, it’s unlikely that you’ll be able to trade in and out of the project.

The example above of Veefriends shows single-figure daily sales below the floor price. It’s not enough to make quick flips.

Alternatively, you can put ‘lowball’ offers to grab a sale and sell when the market picks up.

You must search for a higher-volume project.

Check Opensea Rankings and sort by volume.
For example — Renga is in the top 10 and has a healthy sales volume.
847 — Sales 3 days ago
513 — Sales 2 days ago
142 — Sales 1 day ago

Trending downwards, but still enough volume to successfully buy and sell.

Strategies to buy and sell miss-priced NFTs

Now you’ve found a collection worth trading, and you’ll need to Wrap your ETH and put lowball offers on each of the NFTs in the collection.

When purchasing a token below the floor, remember to price in Opensea’s 2.5% Fee and the Creator Royalty when selling.

10% Royalty for Veefriends
5% Royalty for Renga

Royalties also play a significant part in how much margin you get.

Some marketplaces like Sudoswap charge 0.5% Fees and do not honour the creator’s royalty.

I’m not a fan, personally. The whole essence of Web3, for me, is giving back to the creator economy.

But, you do you.

I wrote a blog on my views here — NFT Royalties Might’ve Changed Forever — Completely Dividing Web3.

Finally

Put as many offers as possible below the floor; ensure enough meat on the bone for profit after fees.

For Veefriends, you must make 12.5% on a sale to break even, so be thoughtful.

Someone overleveraged or looking for a quick sale to buy into something else will take the bait.

That’ll be a magical moment for you, so don’t forget to pat yourself on the back.

Immediately list the NFT you bought slightly above the floor, covering fees taking you into a small profit.

At this point, people purchasing a high-traded volume project are unperturbed, paying a couple of 100 dollars extra. Especially when some of these whales blindly sweep floors or buy NFTs they subjectively like.

Last but not least.

Rinse and Repeat.

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This article is for informational purposes only; it should not be considered financial, tax or legal advice. You can consult a financial professional before making any significant financial decisions.