Gill-ty of Losses
Dear Future Whales,
My journey into the world of NFTs has been filled with highs and lows, excitement and disappointment, lessons learned, and wisdom gained. What started as a curiosity about digital collectibles quickly turned into a deep dive into the ever-evolving landscape of web3. Along the way, I encountered echo chambers, bag pumps, major losses and the constant challenge of looking over the fence to see what opportunities lay beyond. Today’s note captures some of the most pivotal moments and painful lessons from my NFT adventure, offering insights for both newcomers and seasoned collectors alike. Let’s dive in!
Agenda:
Lesson 1: Know When to Hodl Them
Lesson 2: Don’t Be Afraid to Take Profits
Lesson 3: Look Over the Fence (Diversify)
Lesson 1: Know When to Hodl Them
In 2017, when I first delved into NFTs, my goal was to focus on true collectibles and utility. However, I quickly got swept up in the degen mindset. This hit me hard when CryptoKitties were gaining popularity. Refusing to be someone else's exit liquidity due to my late entry into the CryptoKitties craze, I pivoted early to TRON Dogs instead. The site, entirely in Chinese with a terrible interface, required translation. I never owned a CryptoKitty, but I ended up losing $1,200 on TRON Dogs.
Then there is the more painful story of missing out on the free mint of CryptoPunks. I later saw them priced at around $200 but couldn't justify buying a digital picture with no game or utility behind it, although that miss and the regret that followed wouldn't kick in until 2021.
Instead, my first real mint was with Decentraland in 2018. I bought four parcels near the center, believing location was everything in virtual real estate. I paid a Discord member, “CyberMike”, about $1,300 worth of ETH to design a virtual winery to connect metaverse participants with real-world vineyards.
Watch the video here:
When I realized I needed to pay even more for coding physics, I backed out. Crypto winter hit hard soon after, but I held onto my MANA tokens and Decentraland parcels. I waited and waited for things to improve, they just didn’t. I sold them in early 2021, just before the metaverse land boom. Facebook changed to Meta, and Sandbox and Decentraland mooned. I was left fuming, having held through the rough times only to sell before the market took off. I told myself to never sell early again, which itself soon became another lesson.
Lesson 2: Don’t Be Afraid to Take Profits
2021 was a year to remember. BAYC launched, creating several new millionaires. Chromie Squiggles and other web3 art projects thrived, but I dismissed the movement in art as oversaturated noise. Yes, it was a mistake and another lesson learned.
Instead, with my utility-focused mindset, I latched onto Altered State Machine by Futureverse. I minted several Brain NFTs, or AI agents trained to perform various tasks in games. These brains peaked at over 4 ETH. I was sitting on a significant profit but refused to sell, believing this was my turn to strike it big.
Source: Opensea.io Friends advised me to take profits, but I ignored them and refused to fall victim again by selling early. I was forced myself to be a disciplined collector. What I failed to realize at the time was that I had already experienced my best returns at that moment. The next bear market hit, and our beloved JPEGs came crashing down.
This sounds familiar to many of you, I'm sure. We regret missing the best opportunities or not taking profits when we should have, or both. raises hand
Lesson 3: Look Over the Fence (Diversify)
Nearly three years later, many of us are in a similar spot. Yes, some assets are still valuable and have great potential, but most are down 90% or more. If you've been through the above with me, kudos for sticking with it.
I was heavily concentrated in Futureverse and I’d argue that while some might not yet call it a genius move, they did make up some of my losses through ROOT Token Quests. I still have conviction around this project, its partnerships, and their technology. They plan to build their version of the “Oasis”, called Open by Readyverse.
Building an open metaverse is massive undertaking, but I think they have what it takes. That said, my “bag” might have held up better or experienced less downside had I been more diversified across, yes, some of the better art (Fidenzas, Squiggles, Punks), some of the best IP (Pudgy), and projects leading the way in other narratives.
Bottom-line, for those of us left, we have a bag, and we want to know what to do with it.
Time to Re-evaluate:
It is an ideal time now to reevaluate our positions, to research the “why” behind why some collectors pump the projects they are in, besides just pumping. Why do they have the conviction they have? I’d love to hear from you on why you have the conviction you have in whatever project, so feel free to reach out to me and maybe I will add your project to my future notes. But don’t pump just to pump, explain your thesis.
Time to Diversify:
In terms of diversification and thinking about where to start, as a collective, we should be more onboard with the RWA narrative, especially around collectible-backed and various asset-backed NFTs.
First, folks new to web3 and collectors in general can generally get behind the idea that an asset-backed NFT has intrinsic value. Meaning there is a watch worth X that is vaulted and the owner of the NFT may redeem it for that watch. The watch has a value that can be more easily understood.
Second, while collectibles aren’t as volatile on the upside, they also aren’t as volatile on the downside. Furthermore, floor prices are better understood. So when it’s time to exit, you’ll likely receive a more accurate offer or can take advantage of the new collateralized lending protocols. When the market is heading down, these collectibles might benefit from a flight to quality.
The big one: The RWA narrative moves the space forward and gets us away from the degen mindset focused on jackpots and Ponzi schemes that are everywhere.
Summary:
Reflecting on my journey, I've learned valuable lessons and don’t worry, I’ve had wins too. Utility and profits matter, but so does diversification. Embrace the culture, learn from past mistakes, and stay open to new opportunities. The NFT space is ever-evolving, and being adaptable is key. Here's to the next cycle and the adventures it brings.
Marketing Communication
Authored by Matt Bartlett, CAIA. Follow Matt on x.com @MattBartlettVE
NOT INVESTMENT ADVICE
Please note the author has invested in all NFT projects and Cryptocurrencies mentioned within this article. The Author own assets created by the Futureverse team and ecosystem.
Please note that SegMint may offer investments products that invest in the asset class(es) or industries included herein.
The information herein represents the opinion of the author(s), but not necessariy those of SegMint, and these opinions may change at any time and from time to time. Non-SegMint proprietary information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Historical performance is not indicative of future results. Current data may differ from data quoted. Any graphs shown herein are for illustrative purposes only.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information herein represents the opinion of the author(s), but not necessarily those of SegMint, and these opinions may change at any time. Non-SegMint proprietary information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Historical performance is not indicative of future results. Current data may differ from data quoted. Any graphs shown herein are for illustrative purposes only.
In consideration of the receipt of non-fungible tokens (“NFTs”) from SegMint, you represent, acknowledge, accept and agree that: you received the NFTs as a gift from SegMint. You did not pay any consideration, monetary or otherwise, for the NFTs.
The NFTs are not an investment. Rather, the NFTs are digital memorabilia intended solely for entertainment purposes. As entertainment memorabilia given to you as a gift, the NFTs have no value and are not intended by SegMint to ever have any value. Neither SegMint nor anyone else will take or not take any current or future action that is designed in any way to maintain the value of the NFTs, or to cause their value to grow or increase. You must not attempt to obtain an NFT from SegMint if you view it as an investment.
As a condition of receiving the NFTs, you shall hold the NFTs for your own personal benefit, and you shall not act, and are not acting, on behalf of any other person or entity; except that, if you are an affiliate of an entity or person whose relationship or affiliation you have made SegMint aware of prior to your receiving the NFT, and SegMint consents to your receiving an NFT, you may receive an NFT. You shall not sell, assign, alienate, lease, lend, fractionalize, re-gift, convey or transfer in any way the NFTs (or any interest therein) to any other person or entity, even an affiliate. Any sale, transfer, assignment, or other action covered in the preceding sentence shall be void. You must not attempt to obtain an NFT from SegMint if you plan to sell or transfer it. The above content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this email constitutes a solicitation, recommendation, endorsement, or offer by the Author or any third-party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not generally backed or supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. The value of cryptocurrency may be derived from the continued willingness of market participants to exchange fiat currency for cryptocurrency, which may result in the potential for permanent and total loss of value of a particular cryptocurrency should the market for that cryptocurrency disappear. Cryptocurrencies are not covered by either FDIC or SIPC insurance. Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of cryptocurrency.
Investing in cryptocurrencies comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. There is no assurance that a person who accepts a cryptocurrency as payment today will continue to do so in the future.
Investors should conduct extensive research into the legitimacy of each individual cryptocurrency, including its platform, before investing. The features, functions, characteristics, operation, use and other properties of the specific cryptocurrency may be complex, technical, or difficult to understand or evaluate. The cryptocurrency may be vulnerable to attacks on the security, integrity or operation, including attacks using computing power sufficient to overwhelm the normal operation of the cryptocurrency’s blockchain or other underlying technology. Some cryptocurrency transactions will be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that a transaction may have been initiated.
· Investors must have the financial ability, sophistication and willingness to bear the risks of an investment and a potential total loss of their entire investment in cryptocurrency.
· An investment in cryptocurrency is not suitable or desirable for all investors.
· Cryptocurrency has limited operating history or performance.
· Fees and expenses associated with a cryptocurrency investment may be substantial.
There may be risks posed by the lack of regulation for cryptocurrencies and any future regulatory developments could affect the viability and expansion of the use of cryptocurrencies. Investors should conduct extensive research before investing in cryptocurrencies.