Sammy Baker

Top 5 NFT Trading Strategies 2022

Mar 21, 2022

Non-fungible tokens are becoming red-hot investment instruments faster than you can say what! We hear of an NFT art piece going for a million bucks almost every day. While this may seem like a game of chance at first, a lot of investors are learning how to get ahold of a lucrative piece. The secret to their success – profitable NFT investments are more or less due to solid NFT trading strategies.

If you are looking for a short-term NFT investment strategy or a longer one, you have come to the right place. We will help you educate what makes for a results-oriented NFT investing strategy.

1

Should you invest in NFTs?

If you need a brief primer on how to invest in an NFT market, here’s a handy little guide that deserves a look.

But if you want to know why you should invest in an NFT market? Here are a few legitimate reasons for getting into it.

A thriving NFT marketplace

NFTs have been around since 2012, but only came into its own during the past few years. Since 2019, we have been hearing of the one or another best NFT projects to invest in, because the market has been on the upswing. Beeple’s $69 million artwork comes to mind but there are other notable examples too.

All this being said, NFTs are still considered a new concept. But judging by its performance since 2019, it is expanding. Remember – it is the early NFT collectors who stand to benefit in the future.

NFTs are bringing original creators to the front

Smart contracts coded into NFTs make it easy for content creators to profit from every subsequent sale of their tokens. It also promises to solve issues related to copyright infringement, since the NFT comes with a ownership certificate.

Sure, some artists have complained that their work is plagiarized without their knowledge, but that’s an issue that blockchain tech is going to solve with new updates.

Best NFT investment for profits

You will see influencers and gurus online who have dabbled into cryptos and made serious bank with their NFT trading strategy. This is because they rely on an NFT’s uniqueness and do their research beforehand.

The most profitable NFTs are those backed by vibrant communities and legitimate creators. Keep this in mind as you craft your NFT strategies.

What should be my NFT investment strategy?

You can learn all about buying and selling NFTs here. But to become profitable, you need to employ a holistic NFT trading strategy that works for you.

Rule of thumb – spend time researching NFT projects as well as the team supporting it. This fundamental approach to exploring NFT projects will increase your chances of striking gold on a profitable investment.

That being said, here are a few things to keep in mind as part of your NFT investment strategy that need to be analyzed:

  • Market capitalization
  • Trading volume
  • Team repute
  • Scarcity

Market Capitalization

Before anything, check the market capitalization for a specific NFT project. Using NFT research tools like icy.tools and CryptoSlam! should become second-nature to you. These tools yield important data to help you determine the best NFT to invest in.

To calculate market cap for any NFT project, check the total number of holders and multiply it by the average NFT price from that collection.

A higher cap means more token owners, which also means more people will be looking to invest in it.

Trading volume

The best NFT strategies involve looking at the trading volume for NFT collections in the market.
The higher the trading volume, the bigger the demand there is for it out there.

Also make sure you check the trade history behind an NFT collection. Some unscrupulous NFT owners use multiple wallets to artificially inflate their trading volumes as a means to attract would-be investors.

Use OpenSea to check the most promising NFT projects and check their trading volume.

Team Repute

Find out who are the people behind that brand new and trendy NFT collection that people are talking about. Some projects are backed by credible names in the NFT community who have an excellent track record with project launches. These are the developers we need to look for.

We are not going to lie. Some NFT projects have turned out to be a scam where the developers disappear once their project has been sold. That’s why it is important to do your research.

Scarcity

NFTs are supposed to be unique. For creators, that means programming your NFT collections with unique attributes. Some attributes can become so rare that people will be willing to pay top crypto for it.

Rare NFTs have a higher chance of selling out, and for lucrative sums at that. Don’t forget to check out the rarity scores for any NFT you are looking to buy. The bigger this score, the better.

The best NFT trading strategies

Lets cut to the chase. You want to get those profitable NFT collectibles that are high value. A good trading strategy can help you achieve those goals.

Whether you are looking for a short-term or long-term thing, there is a need to carefully plan out your strategy.

Here’s what you need to do:

  • Purchase NFTs at floor price
  • Google Trends
  • Look for NFTs with few sellers
  • Value strategy
  • What about underpriced NFTs?

Purchase NFTs at floor price

Floor prices mean getting the lowest price for something, in this case, an NFT from a well-regarded collection.

Sort the NFTs in a collection to determine the best cheap NFT to buy. Once you’ve done that, only buy the low-priced NFT if you have researched it since the beginning and feel its value.

These NFTs may end up selling for a higher price at a later date.

Google Trends

Check out the current Google Trends on the NFT market. It is akin to marketing research. You will know what NFTs people want to get their hands on.

Trends are rated at 0-100. The higher the value, the more sought-after they are.

Look for NFTs with few sellers

Demand and supply. We need to look for an NFT that is supported by a huge community. We also need to know if there are a few sellers for an NFT collection in question.

The more sellers you see, the harder it is to maintain competitive price increases. Someone else will be selling an NFT at a lower price than you if that’s the case.

Value Strategy

This strategy involves looking for an NFT that’s high value. For this, you will need to use a tool like rarity.tools to find valuable NFTs. Or even NFTRocketpad to find the newest NFTs.

Remember, these are NFT collectibles that are more likely to increase in value over time because demand > supply. CryptoPunks is a great example of a high-value NFT.

What about underpriced NFTs?

As far as looking for the best NFT crypto to invest in, newbie investors should start with underpriced NFTs in the marketplace.
This approach involves looking for NFTs that are now selling for a price lower than what they were originally bought for.

Wrapping up

This is it for our NFT trading strategies for today. There is so much more to learn about NFTs, and we are barely scratching the surface as it is. Keep checking back to learn more about NFT investment strategies to build up your portfolio.