September 6, 2022 - 12 min read
I break down some simple free ways to make the NFT crash work for you. Despite sales volumes dropping nearly 90% from their highs, there are some interesting movers in the NFT space and now is an opportunity to pay attention and inform yourself for the future.
NFT sales are crashing from all-time high sales volumes in early 2022.
Despite a come-back in April of 2022 with NFT sales volume on OpenSea, the leading NFT marketplace, hitting $3.48 billion (up from $2.4 billion in March), sales volume has plummeted over the last 3 months:
June 2022 OpenSea Sales Volume — $695 million (-73% from the prior month)
July 2022 OpenSea Sales Volume — $528 million (-24% from the prior month)
August 2022 OpenSea Sales Volume — $502 million (-4.9% from the prior month)
OpenSea sales volume has dropped 89.6% from its record high in January of 2022 to its August 2022 sales.
That means OpenSea sales volume is down a whopping 85% Year-Over-Year from August 2021 to August 2022.
OpenSea is the leading NFT marketplace that allows users to buy and sell digital collectibles and has done an impressive $31.33 billion in all-time sales volume according to DappRadar, but the latest sales numbers clearly show a significant drop in demand.
You could argue that $500 million in monthly sales volume is not a small number, but when you compare it to a few eye-popping records in 2021 and 2022, there is real pain felt:
$3.4 billion in sales volume in August 2021
$4.85 billion of sales in 1 month in January 2022 (new record)
$233 million in single-day trading volume on January 31st, 2022
Source: Dune Analytics
It’s fair to wonder if other NFT marketplaces like LooksRare or MagicEden have eaten into some of OpenSea’s sales volume, but that’s just not the case.
The NFT market has gotten much quieter over the past few months, but there have been a few bright spots.
This article is not about how to make money in an NFT bear market.
Everyone’s financial position is different, and while none of this is financial advice, the rule I deploy myself is never to spend money I can’t afford to lose completely.
Lots of people on NFT Twitter repeatedly said this, but it’s extremely hard advice to follow in a bull market (I struggled with that and had to take on side projects to make myself whole), but now that we are in a bear market, it should be easier to deploy discipline.
If you need a refresher on how not to lose money in NFTs, you can read this article here, which breaks down 5 lessons from a famed investor.
But this article is not about avoiding losing money in the NFT crash — it’s about spotting learning opportunities to prepare yourself for the wider adoption and evolution of the technology.
You don’t have to spend $1 to benefit from the NFT market crash and it might be better if you don’t — it’s not a sexy strategy, but watching and learning could give you an advantage in the future.
Remember the dot-com bubble?
I highlighted 17 companies that failed (spectacularly) in a short period of time during that era.
The crazy part?
Some of those companies tried ideas that resurfaced in new companies years later and became very successful in today’s market.
Pets.com is the best example of this, as it failed miserably, but Chewy.com came around a decade later and is valued at multiple billions of dollars. There are a lot of reasons for that — detailed here — but there’s a lesson in there:
Paradigm-shifting technologies need infrastructure built up around them to succeed in market-wide adoption.
I don’t know what that looks like for NFTs or the blockchain yet, but based on Pets.com / Chewy.com timeline, it could be as long as a decade:
You have a rare opportunity to watch NFT projects and technology deploy an idea and succeed or fail in a fickle environment.
You also have the rare opportunity to watch NFT project founders who stick around in a bear market and the strategies they deploy.
Gary V raised a $50 million round with a16z for his project, VeeFriends.
MoonBirds, another leading NFT project run by another entrepreneur with a successful track record, also raised a $50 million round with a16z.
Use this time to study those projects and their founders — what are they doing to bring value to their holders and build their IP?
If you’ve been watching the NFT market closely, you may have heard of a new NFT project on the Solana blockchain called y00ts.
How could there possibly be crazy hype (they have 100k Twitter followers and my feed is filled with people tweeting about whether or not they were approved to mint a y00t) for a project during a bear market?
In fact, at the time of this writing, Dust Labs (the creators of DeGods and y00ts) announced a $7 million fundraising round to build out the $DUST ecosystem:
DeGods, an NFT project on the Solana blockchain has done over $60 million in sales volume and the founders are continuing to build.
That team is trying something new with y00ts by introducing ⓨ, a new way of registering copyright that incentivizes artists and holders to enhance the trait assets of their NFTs. You can read the y00ts whitepaper that details their new copyright approach here.
My takeaway from these fundraising rounds is that, yes, demand for NFT is crashing, but NFTs are not going away, they’re evolving.
The hype of 2021 and early 2022 signaled that something very real is possible with this technology, but now we are seeing a narrowing of focus to the top projects.
The non-historical top projects (ones led by established entrepreneurs) are able to raise money and are doing so to offer a runway as they navigate a bear market.
Lots of people seem to be excited to write about NFTs crashing and that they are dead, but so were many people during the dot-com bubble era, and now is the time to consume and learn.
If you didn’t click on the y00ts whitepaper, here’s the link again. Most of you won’t read this, because the hype about NFTs is gone and if you aren’t on their allow list, what’s the point, right?
You now have the opportunity to watch both customer and operator behavior during a bear market, and learn.
Most people are not going to do this, especially since the “hype” is over.
If someone in 2001 had closely watched the dot-com bubble failures, they more than likely could have spotted opportunities in 2007, 2011, and beyond.
This means that you should read the whitepapers of projects making noise in the NFT bear market.
If you read the y00ts whitepaper, you’d quickly recognize that IP ownership and copyrighting is a model that is ripe to be flipped on its head.
You might not be a lawyer, but maybe you recognize that there’s a need for a platform to match make NFT holders with licensing opportunities.
You may not be the one to build it, but you may find a job opportunity in the future that you are much more prepared for because you took the time to learn and build expertise now.
You may end up owning an NFT you want to license and build value into and you’ll be much more informed.
There are a lot of ifs because the market and infrastructure of NFTs and the blockchain still need to mature, but whenever there are more ifs, there’s more opportunity.
That’s the 7-day OpenSea trading volume for various projects.
You’ll see that the fastest-growing NFT projects over the last 7-days on OpenSea (as of 9/5/2022) are:
ENS: Ethereum Name Service — 2,364 ETH traded (wow!)
Bored Ape Yacht Club — 2,126 ETH traded
RTFKT Clone X Forging SZN 1–1,987 ETH traded
Otherdeed for Otherside — 1,842 ETH traded
Clone X — X Takashi Murakami — 1,592 ETH traded
Moonbirds — 1,536 ETH traded
These are not small numbers.
ENS domains lead the way as there has been a large trend over the last 6 months of people buying domains because there is true functional utility behind them. The simplest one is being able to change the name of your wallet from a long series of numbers and letters to a simple name.
The other projects on this list are established and still driving strong trading volumes — I don’t recommend trying to stay up-to-date with each one, but pick a project, join their Discord and dig into what those projects are doing and/or plan to do in the future.
You should also bookmark this link, which is the 30-day OpenSea trading volume leaders. 7-days sometimes catches hype projects (yes, those do still exist during the NFT bear market) but the 30-day window highlights more sustained demand.
These resources aren’t fancy — there are many more reports you can dive into with Dune Analytics and Cryptoslam.io, but I wanted to keep this simple:
The best way to make the NFT market crash work for you is to check the 30-day OpenSea sales volume leaders, pick a project, join their Discord, ask questions, read their announcements, and whitepapers, and search Twitter for the project name.
You don’t need to buy any NFTs, you just need to understand why people are buying these particular projects.
It’ll help you know what to look out for in other projects, and will help you understand where the NFT market is going.
You are probably thinking that NFTs as “investments” makes no sense because project founders can’t legally promise returns from their efforts.
This is my biggest gripe with NFTs — if the IP is built, I can rely on collectability (which is still powerful) and access/utility, but I am not a shareholder in that project.
And I don’t think that will change any time soon, but I do think it will eventually change in some capacity.
For example, many of you aren’t eligible for certain investment opportunities (myself included) because we aren’t accredited investors.
Net worth of over $1 million (excluding a primary residence)
Income above $200,000 individually, or $300,000 between partners/spouses for at least 2 years
Accredited investors are allowed to invest in securities that are not registered with the SEC (think private equity, hedge funds, venture capital, equity crowdfunding).
The reason this designation was created was to protect people who might not be able to afford significant losses, but it also gatekeeps people who want to invest in certain things, but can’t.
That’s a debate for another day, but pay attention to the utility NFT projects offer because it’s the best they can do without dividend payouts, etc.
Use Case for Good Utility Use: DraftKings Reignmakers
What’s absolutely crazy about that stat, is that Fantasy Football is larger than the current estimated revenue of the NFL.
The average NFL franchise is worth $2.86 billion, but fantasy football is an obsession in the US.
Fantasy football is an obsession in the US, and DraftKings has married blockchain technology and NFTs with it.
DraftKings Reignmakers Fantasy Football allows its users to open packs (you can start with a free one) and build rosters to compete for prize money (at the end of the day, most utility boils down to financial gain, exclusivity, and access).
There are various player cards that you can open in packs or purchase from a marketplace.
And every single one of them is an NFT.
It’s the most practical utility application for NFTs that I’ve seen in 2022 and not many people are talking about it.
You can buy and sell player cards for both utility and collectability and have a completely legal way to financial benefits by playing for prizes in fantasy football competitions.
I broke it down here and how you can get a free pack, as well as $20 in DK bucks so that you can play for free to learn from the experience (even if you don’t like football).
You probably don’t love being told that the way to make the NFT crash work for you is not spending any money and instead spending your time observing and consuming what happens during this time, but how many of you wish you could have studied the dot-com bubble to predict the web 1.0 and 2.0 booms?
By studying people and project’s behavior during this time, you’re getting real-time feedback on what’s working and what isn’t.
That feedback is more honest because money spent now should have more conviction because not everything is booming.
I still believe web3 is going to open a world of new businesses, projects, jobs, companies, and opportunities for all of you, and I think the best way to prepare for that is to pay attention when no one else is, build your savings, and use this time of consumption to build pattern-recognition that will serve your time and energy in the future.
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