Although it does seem that non fungible tokens are here to stay and we could be on the path to mass adoption with the world’s most successful investors also investing in NFTs and the biggest NFT crypto platform Coinbase launching its own NFT platform, there are still considered risky and rules should be followed.
The first rule when it comes to NFT investments is not to give in to FOMO, the fear of missing out. Sometimes when we hear in the media how people are making thousands and even millions from NFT investments, we rush in in the hope of achieving the same, out of the fear of missing out on an NFT investing opportunity. The problem with rushing in, is that we end up making an emotional decision instead of an informed and rational decision. We don’t take the time to think and research the best approach. Therefore if you believe you might be acting out of fear of missing out, take a break from listening to the noise out there, and spend time on researching NFT investments further.
The second rule when investing in NFTs is having a clear strategy. When it comes to NFT investing, you need to put together a strategy based on what you can do and based on your circumstances. In that strategy, you have to outline how much you can afford to invest in your NFT crypto portfolio, how many NFTs you are willing to own, the maximum amount you are willing to spend per NFT, the types of NFTs you want to buy, your NFT selection criteria and your exit criteria. For example, you could decide to allocate $10,000 to building an NFT crypto portfolio, not spend more than $1,000 per NFT, own metaverse NFTs and play-to-earn gaming NFTs and sell them on one of the best NFT marketplace when they’ve increased by 30%. Therefore when you come across an NFT, before buying it on one of the best NFT marketplace, you simply check whether it is aligned with your strategy.
The third rule when investing in NFTs with NFT investing is being patient. Like any asset, whether it’s stocks, Cryptocurrencies or non fungible tokens, there is usually sideways action, drops, new highs and a lot of volatility. Sometimes, when an asset we own is not moving for a long period of time, we become bored and end up selling the asset too soon. Or, if the asset suddenly drops in value significantly, we also end up selling it quickly out of fear. To avoid selling your NFT crypto assets out of fear of boredom, rely on your patience. There have been many times with stocks and Cryptocurrencies where they didn’t move for years (TESLA for example) only to reach an all-time high in November 2021.
The fourth rule with NFT investments is beware of scams. Unfortunately there are many scams when it comes to NFT crypto assets. Between rug pulls where someone creates an NFT collection with the intention of making quick money, then quickly abandoning the entire project and making the non fungible tokens worthless, to people selling fake NFTs or asking for your wallet’s private key or seed phrase.
So if you’ve decided to purchase NFTs on one of the best NFT marketplace or on the Coinbase NFT marketplace, make sure you are aware of all the possible scams out there. Falling victim to a scam can really set you back significantly.
The fifth NFT investing rule is doing your research before buying any NFT. Although no one knows how an NFT will perform over time, you can make sure the odds are on your side by researching the NFT project in depth. Make sure that the team behind the NFT project has authority and credibility in the web 3.0 industry, make sure they have a good reputation, make sure that their project has a large and engaged community of fans, make sure that their roadmap is interesting and has a lot of potential and make sure that the project has received positive endorsements. If that’s the case, then the chances of the NFT project performing well are much higher. While performing your research, make sure you buy your NFT crypto assets on one of the best NFT marketplace or on the Coinbase NFT marketplace.
The sixth rule when investing in NFTs is buying at the floor price or pre-launch price. In other words, at the lowest price possible. In many cases, if you are whitelisted by a project to purchase an NFT during the pre-launch sale, you will be buying the NFT at the cheapest price possible. This was the case with NFT Worlds, an NFT project that was selling its NFTs for 0.1 ETH during the pre-launch phase to the people who had been whitelisted. Soon after, the NFT Worlds were made available to the general public on one of the best NFT marketplace and their price quickly rose to above 13 ETH. If you missed the opportunity of being whitelisted, but still wish to purchase the NFT, then buy it at the price closest to the pre-sale price if you can.
The seventh rule when investing in NFTs is taking your profits. Many times, if an NFT goes up in value considerably, we wait before selling it in the hope that it will go up in value even further. Although that might be the case, it is pure speculation. If your NFT strategy is to exit, in other words, sell your NFT when it has increased by a minimum of 30% then follow that strategy. There will always be other NFT investing opportunities you can get into so make sure you follow your exit strategy. If the NFT goes up in value considerably and you didn’t sell it on one of the best NFT marketplace, you could regret it if the NFT suddenly dropped in value after.
The eighth rule with NFT investments is not spending more than you can afford to lose. NFTs are new assets and there isn’t enough history behind them to know with certainty what the future holds. Sometimes, you could have spent a lot of your time researching an NFT crypto asset, making sure it fits perfectly with your selection criteria and ensuring that all the odds are in your favour, only to end up with a worthless NFT. Although this is rare if you’ve done your research, it can still happen. This is why it’s important to always ask yourself before investing in NFTs, this very important question: “How would I feel if I lost that money?”. If you’d be devastated, then you know you are spending too much.
So there you have it, the 8 rules to follow prior to investing in NFTs.