NFT trading is a new area of crypto. Some market participants are making 6 or 7 figures off of this. There are a lot of opportunities here.
Regular readers will know that a few days ago we shared our Altcoin trading strategy. That was a strategy we’ve been using for 5 years. However, when it comes to NFT trading, we are learning as we go. So too is the rest of the market.
⚠️ Please note you are therefore reading our thesis so far. This may change in the future. If it does, we will of course write to you with updates.
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Here’s 5 things you need to know about the crypto markets today:
Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool.
🖼 Fresh Off The Press... Our NFT Trading Strategy
Disclaimer: This is not financial advice, purely for educational purposes. Backtest the strategies and use them to create your own strategies.
1️⃣ Short term flipping
Method 1: Riding Momentum
When you see prices soaring and huge figures like Gary Vee buying an ape punk for $3.7 million, you’re normally near a top or about to explode. This was the latter and someone like KeyboardMonkey flipped a punk for $1 million in two days.
This is our preferred method when trading crypto. The principles of trading a trending market carry over. When popular accounts and influential figures start to invest in something (such as CryptoPunks) there is the opportunity to quickly buy and sell to take advantage of growing hype/interest/momentum.
Easier said than done, continuing on the CryptoPunks example, many people are scared to enter a trend (leveraging events such as VISA’s CryptoPunk purchase to claim a ‘top signal’).
Despite the consistent rise in the price of CryptoPunks, when the news came out that VISA bought a CryptoPunk, people like cryptonekoz leveraged this to flip two punks for +$50,000 and +$200,000 profit.
The idea is simple: Spot hot news as it happens (using twitter, newsletters, networking or discords) and profit off of the trend.
Method 2: Identify a narrative and look where others aren’t
Andrew Steinwold came on the Market Meditations podcast and really blew us away with his NFT expertise. Our first podcast with Andrew is available here and we’ll be releasing another via the newsletter tomorrow. He explained another short term strategy: look where other people aren’t looking.
This is a lot more difficult. The win rate is lower but the upside is higher. You can get trapped in highly illiquid positions so risk management and patience are essential. You also need to know where to look. That’s where daily newsletters like the Market Meditations and Zima Red can really give you an edge. Making you aware of emerging trends and themes before they skyrocket.
🔥 How to get burnt:
Mistaking short term plays for long term strategies. The goal here is to get in and out quickly. This will require emotional discipline. You’ll see the trend continue and you need to be able to sell. You can’t get greedy and hold on beyond your pre-determined sell point (the level of profit you deemed a success before you entered the trade).
The trend will reverse or end at some point and the idea of a short term play is to have exited by that point.
2️⃣ Long term investors
Similar to investments in DeFi, long-term investors invest in NFTs because they believe in the long term use case and product market fit. Perhaps, you decide to invest in DeFi because you believe that long term, traditional finance is unsustainable and has significant shortcomings that are addressed to a large extent by DeFi. In a similar fashion, you may believe that NFTs and digital ownership which can be tracked on the blockchain are the future of: art, music, gaming, land ownership and more.
One of the features we love about crypto and NFTs is the option for long term investors to actually become contributors to the success of the project. Taking Axie Infinity as an example, the Play to Earn NFT game, a lot of the investors are gamers. They are streaming, interacting with the community, adding value and helping build the community and game!
Find something you believe in and are passionate about then immerse yourself in the industry/asset.
🔥 How to get burnt:
Don’t be a long term investor that can’t afford to hold through the dips. That means, you can’t sell to pay your rent or to buy a present for your friend’s birthday. You need to set aside funds that you will not touch for the long term. If you’re a long term investor, short term bumps are part of the game.
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➗✖️ Maths and DeFi
Which DeFi lending platform named after a famous mathematician has raised $8 million dollars in funding?
😡 Coinbase Customers Are Not Happy
Recently, Coinbase has been in deep waters with many complaints coming to the surface and showing signs of accounts getting hacked. Over the past 3 years, there have been roughly 1,128 complaints that people are locked out of their own account. Let’s take a look at a couple major complaints/hacks that have yet to be solved.
Two Horror Stories 👇
1️⃣ One family lost $168,000! They can’t contact anyone from Coinbase over the phone and only receive generalized emails. This occurred on April 28 and they have not been able to recover their stolen funds!
2️⃣ One customer lost almost $35,000 in a 4 minute stretch in March. When he reached out to Coinbase, they responded and said that his computer had been hacked and there was nothing they could do. Coinbase said: “There is no credible or supportable evidence that the compromise of your login credentials was the fault of coinbase… As a result, Coinbase is unable to reimburse you for your alleged losses.”
Should I move off of Coinbase?
Coinbase, like every other exchange, faces certain vulnerabilities to hacks. Whilst exchanges spend millions of dollars ramping up security, the only way for you to not get hacked is if you have a cold wallet that has never been connected to the internet. Taking the proper precautions, your cold wallet is never connected to the internet and thus experiences no hacking risk!
🔐 You are the sole person in charge of your crypto and that can be scary! To make sure your crypto is safe, take a look at our Cryptocurrency Security,
That's right it was Euler, the others are just mathematicians! The DeFi lending platform Euler.xyz has announced it has raised $8 million dollars in it’s Series A funding round. A significant leap from its previous round of $800,000.
Euler was founded in September 2020 after the founders won an Encode Hackathon based on their original protocol.
Encode then encouraged the founders to create a full protocol using their team of researchers based in Oxford and Cambridge Universities, among others.
The aim of the protocol is to create a permissionless lending and borrowing service (akin to Aave and Compound).
Their code has one key difference: that they also wish for this protocol to allow users to create their own lending markets (like making a trading pair on Uniswap).
Currently their platform is scheduled to go live before the end of the year, with their interesting new concept that we are excited to see play out.
🌎🧘♂️✍️ Stories in this newsletter were written by Misael Calleja, Nick T., Max P., Kimia K., Ellen B. and Koroush AK. Graphics were produced by Gerasimos P.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
Disclosure. Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Additionally, the Market Meditator writers hold crypto assets. See our investment disclosures here.