10. P3. NFT CYCLES ARE IMPACTED BY ETH/DOLLAR FLUCTUATIONS Rapid rise in ETH results in higher than proportional decline in NFT values (ETH denominated) Why? People panic and move to ETH to then buy back NFTs cheaper in ETH terms.
… The opposite is somewhat true. When ETH goes down in value rapidly, NFTs don’t seem to offset immediately. In fact, it often goes down with it, though not proportionally Why? Because NFTs are actually pegged more to the dollar than ppl realize
… Overtime, the price stabilizes, but not quite to the previous $$ levels unless of course there is an “Adoption Event”
… A goldilocks situation for NFTs is actually when ETH is stable People tend to get bored, & try to find other ways of generating “alpha” — they’re Degens after all 😂 In this case, they don’t have their money going back & forth b/w ETH & $$. Instead, it moves b/w ETH & NFTs
11. CASE STUDY Punks were on a league of their own, then BAYC challenged them with utility! Certain tier 2 projects like VeeFriends, Cool Cats, Toadz, DogePound, etc. we’re hanging in there & were considered “bluechips”
… Next cycle: Doodles & Azuki started totally kicking the “bluechip’s” asses — by varying degrees Then came Moonbirds… slowly starting to kick Doodles/Azukis’ asses…
12. One project that stayed constant though was BAYC 🐐 It continued to be the market leader by dropping “lower tier” collections to compete at the various price points and steal market share They will do the same with Kodas coming up 🔮
13. LESSON If you’re trying the same crap that was successful 2 cycles ago, you are going to get absolutely slaughtered Also as investors, if you bet blindly on the leader(s) i.e. Kennel Club Dog or “Ape Coin” or whatever, you would’ve nearly 10x’d
14. 🔑 TAKEAWAYS When u realize there is a potential Tesla in the game & u got the FUNDS to play it safe: BET ON THE TESLA ECOSYSTEM If u need to take more risks because u’re starting with lower capital, then bet on some “smaller players” but be damn sure it’s a bull market
15. Remember: it’s much better to be able to turn 10ETH to 30ETH than 1 ETH to 10ETH, even tho the first is a 3x & the latter is a 10x The former bet is MUCH BETTER RISK ADJUSTED Imagine flipping a coin for a 3x vs playing the lottery for a 10x. The first is MUCH MORE LIKELY
16. SO HOW AM I GOING TO PLAY THIS? Because I have a sufficient amount of capital to throw down on bluechips, I’m going to ONLY bet on those I will also opportunistically go in to “higher mint price, higher potential” projects. Think moonbirds at 2.5 or Azuki at 3 when dropped
17. WHAT SHOULD YOU TAKE AWAY FROM THIS? 🔑 Stay the fuck away from any team that you don’t believe can be tier 1 in the space, period Unless it’s altruistic & you have non-financial motives, then feel free to do whatever… but in this 🧵 I’m not factoring in philanthropy