Still Recovering

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December 06, 2022

(Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)

Gm all. Like many of you, I am still recovering from Art Basel. I (Wilson) am also now writing these in the first person, inspired by Chuck. It was great to meet so many passionate builders in this space – I am more bullish on the future of NFTs than ever before. Surprisingly, people seemed *way less* down-bad than I would’ve expected, and clearly have no plans of leaving. I guess when you identify as a cartoon animal on the internet for so long it really does become apart of your identity. IRL fun aside, the NFT market is looking better than expected. Ever since the FTX fiasco, we’ve made a nice recovery back to almost where we were beforehand. Also, word on the street is that a ton of collections, even lesser known ones, are currently raising large amounts of capital. Finally, I’m writing this during blur drop day, so hopefully by the time you’re reading this you have some nice legendary care packages in your vault. All in all, let’s not get ahead of ourselves though. Things are still not great, but better than one would expect after what we’ve been through. Let’s dive in.

NFTs In The News

Market Update

While volume is still down in the dumps, OpenSea + Blur trading volume ticked up slightly week-over-week. In total, blur is now doing almost ⅓ of OpenSea’s volume in just under 2 months since it went live. Now that airdrop farming is over, we’ll get to see how sticky the platform is.

Speaking of a volume uptick, this was especially surprising considering how dead twitter was this week. With a large portion of *active* members in this space partying it up and networking at Art Basel, it looked like a decent amount of folks were still whipping out their Metamasks on mobile.

Moving on, the thread below is a great collection of thoughts around what the next several months may look like in NFTs.

This is very aligned with how I feel. Ultimately, normies think that NFTs are moronic and believe that NFT people simply got lucky for being early. However, because the money made in 2021 was so stupidly absurd and impossible to ignore, the allure of this “get rich quick” ethos will drive them as well as new members back into this market.

Blue Chips

A mixed week for the few PFP collections that you still see active on twitter but mostly positive. With many blue chip collectors at Art Basel, it makes sense that not much went on.

Yuga Ecosystem is flat week-over-week. Notably, Apes still hold a 1-2 ETH floor price lead over Punks, which has now proven to be a 65 ETH stable coin for over a month. Notably here, BAYC, MAYC, and Otherdeeds remained as the #1, #2, and #3 volume on blur for most of the week. Moonbirds had another good week, and reclaimed its 8 ETH floor. Moonbirds have been wildly volatile over the last month and seem to finally be settling in the 7-8 ETH range for now. Along with the owls, Azuki’s continue to look strong after reclaiming their 10 ETH floor last week, and are hovering right around 11. Still the strongest collection in this category by a long shot.Clone X took a big hit this week down from an 8 ETH floor to a 6.3 ETH floor. The original 8 to 7 ETH floor drop made sense due to the Animus Egg airdrop ( worth 1 ETH) but with recent FUD around MNLTH last night, these continued to tank down to 6.3 ETH. Doodles are the only collection in this category taking a real dip and are back below a 7 ETH floor. Doodles have been struggling a lot recently, unable to hold above 7 ETH for more than 2 consecutive weeks. Looking like there’s going to be a catalyst by the EOY that knocks them decently lower or higher. Cool Cats were 13 ETH when Penguins were below 2 ETH back almost 1 year ago. Oh how the times have changed – 1 Penguin can now get you more than 2 Cool Cats. Cats have been struggling a lot recently and cannot hold any pump above 2 ETH. If Penguins are able to move above ~5 ETH while Cats are flat, we’ll have to re-organize these categories.

As our readers know, the author(s) of this newsletter are very biased when it comes to the Penguins, which seemingly has worked out very well for us. However, let’s simply look at the facts. The collection is the only one in this category that is up since the start of the bear market. While every other collection is down 50%+ from its ATH in ETH, Penguins are floating just around their ATH up over 200% since June. The secondary collection Lil Pudgys also made a 100%+ floor price jump this week alone. Remember, this collection is battle tested and has been around the rocker when it comes to FUD. Penguins survived for ~6 months with no real team/leadership in place and still managed to hold a 1 ETH floor. Most of the original and largest holders have continued to accumulate the entire time. As we know momentum is everything in this space, and as we also know Penguins thrive in the winter. I think there are good things to come here.

Overall, we’ve made a very nice recovery since the FTX blow up and dip buyers are looking like gigabrains right now. However, if you panic sell your jpeg at the bottom don’t beat yourself up over it. We’re on the highest end of the risk spectrum and sometimes it's tough to imagine a cartoon picture is going to hold value in the face of an industry calamity.

Musings

New mints are absolutely in the gutter recently. Unless you have WL for Cockpunch or Lost Realms, you’re *most likely* better off saving your funds. There’s projects under the radar that have held solid floors throughout the bear like Creepz or My Pet Hooligan with rumors of funding that are probably better bets. Or, simply sitting on your hands is still a winning strategy. Don’t forget, momentum is everything. If you spot it early the you could be up 2.5x if you bought Lil Pudgys for .12 just 2 weeks ago. The point being, there’s no such thing as a .1 to 1 eth flip in this market. Keep in mind the successful new mints are minting for .3-.5 ETH and are at best getting you around a 2x profit if you time everything accordingly.

The winners are “DYORing” and spending a decent amount of ETH for high risk/high reward plays (every single NFT). For those wondering, yes, I am a firm believer we will see another “mint mania” again for sure. No, this will not happen for some time. I am confident though that 1. the bull market will come back and 2. mint mania will happen as well. Minting is extremely alluring to new entrants or those people who only want to risk $300-500 (aka gamble).

As mentioned in the market update, these folks have seen absurd gains and think that everyone here simply got lucky by being early, they'll think the same and think it's easy to turn $300 into 10k by minting the next hyped thing.

Transparently, writing about the space right now isn’t easy. Volume is low, pumps are rare, and floor prices are obliterated. As we look forward to ending what has been an extremely rough half of 2022, I’m still confident there will be brighter days ahead. However, I expect the rest of December to be relatively quiet, with not much going on. Probably a good time to take some days away from the computer (even though this has worked for the last 6 months) and build a plan for the new year.

We’re kicking off the new year with an airdrop and potentially a ton of announcements from projects raising capital. While I don’t expect the bull market to come back anytime soon, I do expect some high quality names to continue to recover nicely and some new collections to make real noise.

Final Thoughts

After meeting up with people IRL at Art Basel for my first ever web3 event, I’m blown away by the types of people who are in this space. Despite our bags being down-bad, the vibes everywhere were high and folks from all different walks of life came together with a common mission to push this space forward. Definitely confirmed my belief that I’m building in the right industry and despite the turmoil/volatility, NFTs are here to stay. We’re still early, anon.

Cheers all!