The Best NFT Trading Strategies for Investors in June

Key ideas:

  • The NFT industry is now a $21 billion market with over $61.83 billion traded to date.

  • The popularity of NFTs has also impacted the token market as collections have launched their only token.

  • The recent crash made NFTs an investment hedge for crypto market volatility.

When Non-fungible tokens (NFT) saw the light of day in 2014, they were just another innovation in the still-developing web3 space.

It took another six years for the same NFTs to find value, and by the end of 2021, these NFTs became mainstream and turned into an investment vehicle.

So, as we near the end of the second quarter, here are some ways you too can be a part of this community.

The NFT trading strategy

Investing in NFTs is not the same as investing in cryptocurrencies because, unlike the latter, NFTs cannot be bought and sold according to the movement of the market, because each individual NFT has different values.

For example, you can buy a Bitcoin and sell it the next day and buy it back the next day, and that bitcoin would be the same as the first purchase.

However, if you buy a CryptoPunk and sell it, you may never be able to buy it back, and any other CryptoPunk will not be the same as the first one.

<em>Each NFT is different from the others even if it has minor differences |  Source: CryptoPunks</em>” data-src=”–/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MA–/ 1.2/YZPQASDrQnBxtbi.VJVPxw–~B/aD0wO3c9MDthcHBpZD15dGFjaHlvbg–/″/><noscript><img alt=Each NFT is different from the others even if it has minor differences | Source: CryptoPunks” data-src=”–/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MA–/ YZPQASDrQnBxtbi.VJVPxw–~B/aD0wO3c9MDthcHBpZD15dGFjaHlvbg–/″ class=”caas-img”/>

Each NFT is different from the others even if it has minor differences | Source: CryptoPunks

So, if you decide to invest your money in these non-fungible tokens, you need to be prepared.

Value the project, not the NFT

In many cases, investors tend to jump on NFTs that are suddenly trendy or incredibly expensive and ignore the cheaper NFTs, thinking that they may not have any potential value. This is where a good opportunity can be lost.

Projects backed by big names and developed by notable artists will have much higher value in the long run, and should be aimed for.

Reputation and community

Since NFTs are a relatively new breed of crypto, they also remain vulnerable to scams and all-in pulls.

Also in the past, projects such as Frosties and Evolved Apes have managed to get away with an investor mat of up to $3 million in NFT value, even though they were among the hottest projects.

This is why it is necessary to ensure that any NFT project has a team of developers that is credible and transparent with the community.

Buy high, earn more

Another smart trading strategy when it comes to NFTs is to make sure that you are not only the first but also the best in the community.

Entering the collections can be done by buying at the lowest price or by buying at the highest price.

If you choose the latter option, you must be prepared to shell out a lot of money, because in some cases, the rarest and most popular NFTs can cost up to $33 million.

However, it also makes you the owner of the rarest and most demanded NFT, which can then be kept or sold for profit in the future.

But buy as low

This strategy depends on the NFT collection. If you find a project that has growth potential, bet on the floor price. As the value appreciates, the floor price would also increase, making even the most common NFTs profitable for you.

Don’t be afraid of the trends

While trending NFT projects aren’t necessarily the most attractive investment options, they are a solid long-term scalping opportunity. This strategy is an effective trading method in the derivatives space, but can also be applied to trending NFTs.

One can buy a most basic NFT as soon as the collection starts gaining popularity and demand and sell for a profit once it is at its peak.

However, a trader should be aware of changing trends as the NFT market is also prone to volatility.

Just recently, one of the best NFT collection, CryptoPunk’s floor price rose from 61 ETH ($107,000) to 47.32 ETH ($83.6,000) within a month. Situations as such should be avoided in such a strategy.

More the merrier, the merrier!

No need to be a genius to deploy this strategy. By simply combining the factors of the aforementioned strategies, one can expand his portfolio by investing in more than one NFT project.

Also with the growth of the Metaverse, many NFT collections are integrating with the virtual world to create deployable avatars of NFTs. This gives utility to an NFT even if it is not valued on the basis of scarcity, causing the price to increase.

Investing in this way also avoids excessive losses, as a decline in the value of one NFT can be offset by the increase in value of another NFT in the portfolio.

Invest in NFTs by NOT investing in NFTs

Finally, there are ways for an NFT enthusiast to find exposure to these tokens without directly risking themselves. This can be done by investing in tokens of the NFT projects, marketplaces or blockchains they are associated with.

Examples of the same can be found in ApeCoin (APE), the token of the Bored Ape Yacht Collection, which was launched last year and currently has a market capitalization of $1.75 billion.

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ApeCoin is an option to invest in NFTs without direct exposure to BAYC

Another such token is TO FLOW of the Flow Blockchain, the demand for which has exploded in recent days.

Supported by people like CoinbaseDreamworks, Samsung and Google Ventures, the Flow blockchain was created by Dapper Labs, which is also responsible for creating the NFT collection, Cryptokitties.

In conclusion, there are many ways to invest in NFTs, as long as you use the most optimal strategies to earn profits.

This article was originally published on FX Empire

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