Here are the most common beginner mistakes in NFTs and how to avoid them.
Aping into influencer/hyped projects.
Yo I get it, it’s cool, your fav influencer is launching a collection. But almost always it’s just a cash grab shit project without any utility. Avoid these at all costs.
Be very careful when getting into hyped projects. Minting presale and selling pre reveal is one of the most consistent, profitable ways to make money off of NFTs.
However, you need to be very careful and ensure you’re not left catching the falling knife. Here’s my NFT flipping guide:
There are so many people who are trying to flip their $1000 into 10M in 10 days. Crypto is a long term game. There’s no free money. Do not expect to get super rich very quickly, especially when you’re starting small, play the long game.
Knowledge is key. Everyday there are a 1000 10x plays. You can’t get all of them. Do not try to FOMO into a project that already 10x from mint price. It’s not gonna happen. There are so many projects. Take time to learn and research. You’ll catch a running bull.
Choose your investing style based on how much time you have. If you’ve only a couple of hours every week, you are not going to be flipping NFTs. Way too much is happening.
Grinding whitelists is a full time job. Keep up and finding the right projects to flip is a full time job. Instead, you’re better off buying projects that are relatively undervalued but have a solid team, traction & utility and forgetting about it for a while.
Do not go all into projects. No matter how amazing a project seems, allocate properly. Ideally, you do not want more than 10% of your total capital in one project. NFTs are fickle creatures. You never know when something might go to shit.
Not realizing that NFTs are illiquid. NFTs are non fungible. They’re unique. Which means that for every NFT you need a buyer who is willing to buy your NFT. NFTs by nature are more illiquid than most assets. Don’t put all your bags in one NFT and get it all locked up
Liquidity is key. There are hundreds of plays every single day. The single most important thing is liquidity. If all your money is locked up in a couple of NFTs, you will miss on countless plays.
Volume is absolutely essential. NFTs are largely driven by the community and hype. If there is no volume, your illiquid NFTs won’t sell, no matter how much you list them for.
No one wants to buy an NFT that has no buyers. Make sure you closely look at the volume. Check sales activity, look at how many are being bought how often.
Most NFTs will go to shit. Here are some cool numbers from the Milk Road newsletter: “There are 6.8M NFTs on ETH and Polygon. Only 15k have ever sold (0.2%). People love to talk about how 99% of NFTs will go to 0, but 99.8% of NFTs already have no market value.”
Set exits and stick to them. This is akin to any investment but decide at which price you want to exit. When it hits that price, actually sell it.
Sure, you may lose out on a couple of pumps, but in the long term you will profit way more for smaller, consistent wins, that erratic, mindless holding. Hodl is a fun meme. But money is important. Stick to your plan and exit.
Your biggest objective is to survive and make consistent profits. There are so many opportunities, stick around long enough and you’ll get them. You can’t if you go to 0. Survive. Play smart.
Scams are everywhere. Rug pulls, phishing, you name it. Practice good security. Bookmark links, use a cold wallet, have multiple vaults, do not sign random websites, do not link of sketchy links.
Scams are getting harder and more creative. Be hyper vigilant. Here’s a good security checklist:
NFTs are a long term game. Get familiar with it. You will lose money. You will get burnt.
But play it smart and you’ll eventually make a lot.
