When is the NFT bear market going to be over?? And more importantly… wen Lambo? Nobody knows, of course, but here’s a perspective that, while a little bleak, may also contain some hope and some possible alpha. It may not lead to Lambos, but who knows, it might…
First a disclaimer: this is an opinion. I think it’s a real possibility. I think it’s a likely possibility. I don’t think it’s the only possibility, or the only possible way of reading the market. But I think it’s worth seeing the reality I’ll try to expose in this thread.
So when will the bear market be over?
Sorry to dish the cold hard (possible) truth, but it is quite plausible that what we experienced in August and part of September will not come back. The days of throwing money at jpegs and becoming rich overnight… are over.
Fundamentally, the system was unsustainable. I’ve talked a fair bit about sustainability of projects. If you haven’t read my thread about this, here it is:
It has lots of funky diagrams that are actually very simple and useful.
And the same diagram that was applied to a single project can be applied to the market as a whole, with the same principle: Money in = Money out M1 = M2 + M3 + M4
As long as people kept on pouring into the market with fresh money, the system appeared to work and make lots of people rich. But like all such systems, whatever p-word you may want to call them, eventually the fresh blood runs out.
If you’re reading this thread, you probably have a pile of NFTs in your wallet. So do I – 91 at the last counting. If you’re like me, I’d like to invite you to a special club. There’s no Discord, and no specific NFT for membership. It’s called the bag-holders club.
The problem with unsustainable ponzis and pyramid schemes, and the reason they’re illegal, is because “innocent” people who “invested in good faith” always end up left holding the bag. Yes, look in the mirror at your beautiful innocent face. 😇
Now, I don’t believe that this is true of all the NFTs in my bag, and probably it’s not true of all the NFTs in your bag either. But it’s probably true of most of them. And I think it’s best to face the reality of it than live in denial.
For months, projects promising instant riches took money through mints, and then spent it on other stuff. Some of it ended up spent on more NFTs and so went back into the market. But some of it definitely paid for things like food, rent, and, well, Lambos.
Then the music stopped, new investors stopped coming in, and so now even apparently “good” projects aren’t selling out mint, because there’s nobody with liquidity left to buy them. We’re all too busy holding all these bags!
Welcome to the bottom of the pyramid. There’s a lot of us down here, you won’t be lonely. 🙂 But surely, another wave of investors is coming and the next market pump is just around the corner?
Well, maybe. But here’s another bit of truth-dealing. Hope that constantly recedes with the horizon is usually a mirage. If you’re always looking to that thing that’s going to get the market moving again, but it ain’t happening. Maybe it’s just not going to happen.
First it was Halloween that was going to get things moving. Then, once the liquidity locked up in the Mekaverse mint finally freed up, we were going to see a boom. No? Ok, well, maybe after Meka crashed. No? It must be the gas! When gas goes down, we’ll go up!
As a side note here, I’ll repeat once again that gas is not going down. Though it did go down for a few days at one point and that did precisely nothing to the NFT market. More about gas not going down here:
The latest receding mirage has been “when coinbase launches their NFT platform”. That appears now delayed by at least 3 months, maybe 6. Presumably now we’ll shift our hopes to the festive season when everyone will finally come flocking to our NFT projects.
And you know, maybe people will flock to NFTs for Xmas, but I doubt it. Most people are largely vaccinated against the “get rich quick online” message, by cultural memes that point out the truth, which is that those messages are usually lies.
I think by now, most of the people who both have the money, and who would be willing to take the risk to put hundreds or thousands of dollars into a jpeg, have done so. There’s gonna be stragglers, but I doubt there’s going to be all that many. I could be wrong ofc.
But what about “We’re early!” “WAGMI!” We *are* early. But what are we early for? Hint: we’re not early for the latest mega-ponzi. If you’re holding bags of NFTs of cute animals, sorry, but you’re mostly late.
Right now, the NFT space looks a bit like this, and it’s easy to think that it will always look like this, and that that’s what we’re early for. I don’t think so. Again I could be wrong. But I don’t think so.
That diagram looks like it’s the whole NFT space. And right now it is. So surely, if we’re early, then people will flock back into those blobs which we need them to do so we can sell our bags. Please allow me to offer a slightly different perspective of the future.
Here’s what the NFT space will probably look like in a few months or years. People will be using NFTs for everything. I believe it. Mass consumer adoption is going to be a huge thing and it will change the world for the better.
But most of those consumers are not going to be spending $5k for an Avatar picture. And they’re not going to buy into anything that smells of “get rich quick”. Which, let’s face it, is a pungent stench that dominates our space at the moment.
“Normies”, as NFT folks like to dismiss them, will spend money on NFTs:
- $20 for a Mickey Mouse avatar for their kid
- $50 for a concert ticket
- $100 for a premium membership to their local pub
- $500 to support their football club
It’s coming, and it will be huge, and it’s exciting, and it’s going to entirely bypass our little universe of randomised animals and apocalyptic punks and whatever other random shit we dreamt up in our quest for riches.
And it’s probably right that it should.
Why is it right? Because most of those projects don’t provide any real, sustainable value. So they actually deserve to die. I hope I get to sell some of my stuff for a decent price, but let’s face it: if it’s not sustainable, I’ll just be passing my bag onto someone else.
And then they’ll lose their money holding a worthless bag.
I’m human so I can’t help but nevertheless hope to not be the one left holding the bag. But someone will be. Chances are, annoyingly, it’s probably me. And you. Sucks to be us.
I promised some hope and alpha, so here’s a ray of light in this bleak landscape.
Even if this perspective is spot on, there are two scenarios where our NFTs are not ultimately worthless.
One is where we invested in projects that deliver actual value. Those projects have a chance to last because they’re sustainable, long term endeavours.
So if you’re holding some of those… well, those might still go up, especially after all the other ones die out and stop sucking the air out of the room with their dying gasps (blunt, sorry – but there are too damn many projects atm).
And because this is crypto, and because of the relentless economics of limited token issues, any project that survives and continues to deliver value will probably go up substantially eventually if they play their cards right. So we might make our money back on those.
And the other thing is, hell, maybe I’m wrong that everyone who might get into NFTs is already here. Maybe the recent rise in the Mutant Ape floor heralds the start of a new boom! If so, perhaps all bags will rise again!
But I know what I’ll be doing with my liquidity if that happens: being extremely discriminating and investing only in projects with long term sustainable value and not a whiff of get-rich-quick about them.
And you know, I hope you do the same. Which is self-defeating.
If we’re all smart and invest only in good projects, then all the “bad” projects we’re holding will never rise, not even in a boom cycle.
And I kinda hope everyone will be smart.
So I guess I’ll be holding these bags for a good long time.
TL;DR: If we’re super lucky and the NFT market pumps again…
Buy much smarter.
gm & gl