NFTs explode into $27B phenomenon as investors with 'bigger bags' put them to work - Aliens: AI Crypto News & Markets Updates



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NFTs explode into $27B phenomenon as investors with 'bigger bags' put them to work

Yahoo Finance

Tue, Dec 07, 2021


Aliens TLDR

The non-fungible token (NFT) market has exploded this year into a $27 billion segment of the crypto market according to a new report from Chainalysis, which underscored what separates the most profitable digital collectors from the rest.

Similar to decentralized exchanges or other peer-to-peer crypto trading platforms, most NFT marketplaces don’t directly hold NFTs for customers.

However, the majority of the market's volume is made by NFT collectors and institutions, but far less than what’s been seen in the broader crypto market.

Ethan McMahon, the Chainalysis economist who authored the report told Yahoo Finance the data suggests clear patterns for what makes a successful NFT collector.

"Whitelisting," or getting a discounted price at the intial creation of a new colection's release, appears as one clear advantage for collectors looking to make a decent return on their NFT.

Collectors can also make a good return by "flipping” a pre-owned NFT on the secondary market.

The most popular NFT collections like Crypto Punks, Bored Ape Yacht Club or its derivative collections, see the largest swaths of trading volume accumulate around a release week, “where everyone’s just hyping into the project and doing all sorts of things to drive up its volume,” McMahon told Yahoo Finance.

On average, the best performing collectors on Open Sea make triple their initial investment every time they flip an NFT, whereas the lowest performing group returns an average loss of 0.9 times their initial investment.

Judging from their transaction data, these successful collectors also tend to make more NFT purchases across a wider variety of collections.

While the report highlights that legitimate money can be made in the NFT market, McMahon cautioned newcomers to first pay attention and "do your research" before "aping into the latest collection." David Hollerith covers cryptocurrency for Yahoo Finance.

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