The advantages of a market cool down and taking stock of your tax liability
Welcome to the ‘Rare Club Nifty Newsletter’, a curated snapshot of what matters most. We provide informative and easily digestible content about the NFT space, with one publication a week. Subscribe for free at the bottom of the article.
Includes NFT news, trending narratives, educational info, tips, projects to watch, occasional deep dives and more.
HEADLINER - ‘NFT market cools down as investors head for safe-haven assets‘
The NFT market has seen a sharp downturn in sales volume over the past few weeks as investors shift their attention away from high-risk endeavours and towards so-called safe haven assets. This is in reaction to the ongoing conflict in Ukraine, amongst other things.
Not only do investors reallocate funds to lower risk assets during times of uncertainty, they also tend not to take on any new, additional risk.
These factors have led to two things with respect to the NFT market:
Liquidation of NFT assets
Severely reduced sales volumes
In turn, these market conditions have led to some interesting opportunities. We’ll explore these further in the section ‘NFT Musings’ featured below.
To read the full article on the market cool down, please click here.
BUZZFEED - Curated news. Click to read
NFT MUSINGS - ‘Downtrends create a buyers market’
Google Trends data has revealed that searches for ‘metaverse’ and ‘NFT’ are down considerably since the latter stages of 2021. They are currently at an all-time low having continued their downtrend since the beginning of the year. But is this cause for concern, or something else?
The answer depends on your conviction. If you have high conviction in the NFT space long-term then you’ll have no fears. These waves of interest and mini-bubbles are just part and parcel of such a nascent industry.
Warren Buffett once said that it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.”
However, during such periods of instability, there is often great opportunity. With people intent on offloading riskier assets, combined with a slump in potential buyers, we’ve seen NFT floor prices drop considerably.
Take this one example: There’s a highly coveted historical NFT asset called ‘NINJASUIT’. It’s considered one of the few “holy grails” within the NFT space, and had been trading at around 20ETH a couple of months ago, with a local high of 28.8ETH. Enter the bear(ish) market. Over time, sellers began asking less and less, until one went all the way down to 7ETH, which was snapped up within hours of listing. This represents just over 75% discount on the recent high of 28.8 ETH, and an incredible deal for such a highly regarded collectible. The floor now sits at 15ETH.
The point here is that bearish markets are excellent buying opportunities, so always keep enough liquidity on hand to be able to participate. Also, patience is a virtue in this game. If you’re after an expensive asset, be prepared to wait for the right entry price.
A more glaring example of this has been the ‘Bored Ape Yacht Club’. This collection has retraced from a 120ETH floor back to around 70ETH. Take into account the ETH/FIAT rate changes too, and they are at a considerable discount versus two months ago.
If you have a shortlist of NFTs you want to purchase, now is a good time to check out the entry prices. Of course, we could see prices drop further, but if you are long on the collection, you can at least be sure you’re not buying the top in the current market conditions.
BIG MOVERS - Collections with impressive stats from the past week
CyberBrokers - This collection by Josie Bellini is the shining light within the NFT market at the moment. It has seen very impressive sales volumes of over 11k ETH with its floor rising from 1.8 to 2.4 ETH in the past 24hrs or so.
Invisible Friends - This collection is still seeing large volume and has risen from a 5.7 ETH floor last week to 7.3ETH this week. It looks to be a strong project with a solid team and community.
Bored Ape Yacht Club - This iconic collection has seen further retracements from around 85ETH to 70ETH, and back up to 75ETH within the past week. But there’s still strong demand with it occupying the 2nd spot in weekly sales volume.
VeeFriends - This blue chip collection from Gary Vee has seen a surge in interest after news of Season 2 was released this past week.
Dippies - A cute new entry sees decent volume, putting it 4th on the weekly sales volume chart. It’s a collection of 8,888 unique digital hippies that are building the new free world.
THE WATCHLIST - Projects we believe have long-term potential. DYOR
Mutant Ape Yacht Club (same as above, extension of BAYC, well established)
V1 Cryptopunks (original Cryptopunks contract, historically significant)
Meebits (same team as CryptoPunks, mass appeal, early 3D avatars)
Cool Cats NFT (very strong community, respected collection, mass appeal)
Lost Poets (created by famous artist ‘Pak’, strong community)
Parallel (gaming, TCG, strong team, incredible backers, big ambitions)
My Curio Cards (historical significance, early ETH NFT)
Spells Of Genesis (First TCG on the XCP blockchain, 2015, huge significance)
CryptoMories (unique artwork, good community, lowish entry price)
DeadFellaz (very strong community, established)
World Of Women (celebrity endorsed, one of 1st female avatar collections)
Crypto.chicks (impressive marketing and immense IRL collabs)
TIP OF THE WEEK - Understanding Tax Liability when it comes to NFTs
This is a topic many people either don’t understand, or don’t want to understand. But it’s something you need to pay attention to, to ensure you’re not caught out later down the line.
Below are two simple infographics outlining the basics for NFT investors and NFT creators, courtesy of KateCPA.eth, a tax lawyer specialising in crypto/NFT tax.
RARE.NEWS - Updates regarding the Rare.club NFT DAO fund
Discord is set up and you’re welcome to join by clicking here
New website coming soon
Three projects lined up for incubation: a Solana project, a launchpad and a generative art platform
Next fundraising round will commence in Q2 2022
Links to our socials and website coming soon,
Thanks for reading, and see you next time
Always DYOR (do your own research). Nothing in this or any other article in this series should be construed as financial or investment advice. We do our very best to provide useful information for our readers. What you do with that information is up to you.
Remember to exercise caution within the NFT space. The community is full of amazing people, but there are unscrupulous ones too. Keep your wits about you, and act responsibly. As always, good luck.