🕋 NFT #02-🧑‍🎤$211 million dollars of CryptoPunks Sales Volume vs. $50 million dollars of Bored Apes

Also we go over the 🐻 Bear Case for NFTs

The Punks on the homepage of the Larva Labs website, which fetch an additional premium. Which one would you buy?

If this is your first edition of the Non Fungible Times newsletter, welcome! We aim to be the most comprehensive news source for all things NFTs - from new projects to industry drama, to business opportunities in this growing space.

This week’s newsletter includes:

  • ⚡ Diving into CryptoPunks activity and other trending projects

  • 🐻 Reddit post which went viral about the ultimate NFT Bear Case

  • ⚖️ Decentralized Auction Houses and more businesses joining into NFTs

🧑‍🎤 CryptoPunks Trading Hit $211m in 7 Day Sales Volume

The Story: Yes you read the headline right. That’s 1,577 Punks changing hands for an average price of $134k, over 7 days (225 trades a day on average).

Did those people not think about buying a house with that kind of money? Well it depends - a lot of the sales volume is pretty top heavy, or “whales” as they’re called in crypto land.

Gary V for example has purchased $6m of CryptoPunks from May to July 2021. Most of that volume came from a gigantic purchase of this Ape Punk for $3.76 million (Apes are considered the second most rare, with only 24 total out of 10,000). It’s clear that Gary believes in the Punks!

There’s also the crypto equivalent of Venture Capital funds, or DAOs moving in on the action as well. DAOs are decentralized funds where there’s no managing party, and everyone who is a part of the DAO has voting rights.

The Flamingo DAO purchased an Alien Punk in January of this year for $761k. Seeing as how an Alien Punk later sold for $11.7 million at Sotheby’s at auction, they would have made pretty good 15x returns on their investment! There’s practically no other investment vehicles that can return 15x on your investment in less than 6 months at this volume.

Another group named The Party of the Living Dead and led by NFT influencer Andy8052 pooled together a collective amount of $3.5m to deposit and fractionalize their very own Zombie Punk #2066, and receive the $DEAD token in return.

Other notable projects from this week:

  • Fortune Magazine is getting on the NFT craze, and they’re certainly doing it in a “smart” way. They teamed up with crypto artist Pplpleasr who’s well known for selling her 1/1 works for $1m+. The way this auction works is that every time there’s a new top bid, the artwork will adapt to a new custom artwork or animation that represents that bidder. This is a really cool look at the ways media in the future may act. What if we could each bid on the cover of Time Magazine in real time? And it changed based on whoever owned that property on the blockchain. Auctions end in 3 days in case any Chads or Chadettes want to get in on that action.

    The Opportunities: There’s multiple opportunities here, but several big takeaways overall.

    • For Creators: This may seem obvious but if you’re going to create a NFT, there must be a story involved. The story can either be that you’re a legacy crypto creator, or you’ve teamed up with an institution like Fortune Magazine, or most relevantly right now, you’ve created a lore and universe around your NFT set.

      There’s a reason why many celebrity NFTs failed and it’s because their lore and universe is old news. Their story has already been told countless times in movies, celeb gossip magazines, and interviews. These recent NFTs though introduce a new world, a chance to experience a virtual (and soon, a “real” one in games like Sandbox) universe, and a vibrant and energetic community, all for a fee paid in ETH. And the better the story and the experience, the higher the price will go.

    • For Collectors: There’s many ways to profit from the NFT craze and they’re basically split out by your financial situation. For those with a smaller ETH stack, or less liquid assets, you should monitor up and coming projects. The site Nft-stats has a sort by new page which lets you see new projects that have some traction.

      Generally projects when they first launch are affordable, less than .5 - .7 Eth and so if there’s one that you like the branding and art style of, go ahead and try buying of those. If the project goes well you can sell it for a nice profit and return to those who aren’t as in the know as you 😉. You can also invest in the increasingly fractionalized space, which is the issuance of tokens that represent the overall value of a NFT. Again, the returns on blue chip NFTs is astronomical right now, and probably better than most asset classes, even though there’s obviously risk involved.

      If you have a larger ETH stack, then you should be looking to buy historical NFTs. Every collection from 2017 like Mooncats, Crypto Cats, CryptoPunks, and of course Autoglyphs have appreciated massively and as money continues to flow into the space, those historical NFTs will only become more in demand. Alternatively you should buy whatever valuable collectible assets that you want from sets, like a high tier CryptoPunk or BAYC ape. It’s hard to recommend NFT Art at the moment unless you really particularly like the art. The art scene initially started off very strong, but when euphoria fades, the art pieces are the first to drop in value, simply because they don’t occupy the public attention for very long.

🐻 NFT FUD and Despair - Sell Everything, It’s Over

The Story: This Reddit post by user /u/EverySingleDay got 3k upvotes on the subreddit /r/BestOf, explaining a very simple ELI5 version of what NFTs are. He basically describes a scenario where children are running around on a playground, and one of them shouts out “in the name of Michael Jackson”, and then another kid hands them $500,000. Another kid may shout “in the name of Elon Musk!” and then another kid would give them $750,000. And afterwards the other kids would be in awe and remember that that kid is so rich and can afford to flex like that. The Reddit user points out that there’s nothing stopping the kids from making up a new game where you shout “Celebrating Elon Musk!” and then the previous phrase becomes useless.

This is actually a pretty valid critique of NFTs in some ways, especially since it’s such a new medium. Who’s to say that anyone will care about NFTs 5 years from now? They’re not “backed” by anything, or tied to anything concrete in the real world. For example, a house deed is valuable because people will legally own a home and get legal rights to it. A stock in a publicly traded company is valuable because companies continue to create value for the public.

But there’s some convincing counter arguments around the same theme, which is basically that mind share sells. There’s a reason why a holographic Charizard sold for $1m dollars recently, and it’s because Pokemon collectively took up so much mind share during the 90’s and early 2000’s, and continues to stay relevant even today. I hate to break it to you but Pokemon aren’t real and never will be, so there’s nothing backing the franchise in tangible assets.

Just because a medium isn’t “backed” by any physical asset, doesn’t mean that it’s not worth anything. Ultimately value is just a concept and it is people agreeing that something is valuable, or more specifically that it’s of high value and will last.

The blockchain is particularly prone to high estimations because its best use is as a store of value. It’s especially easy to imagine Punks at $1m if you imagine a world where almost every form of media or online data is stored on the blockchain. Because after all, all media is owned or created by someone right?

So these estimations are basically by Blockchain purists, who are pricing NFTs in a futuristic way, taking into account a world that plays out the way that they see it, where every app is a decentralized app, and every media sits on the blockchain as a NFT. The classic example is a decentralized music application. Instead of having an intermediary like Youtube or Spotify sit in the middle, you can host all the songs on the blockchain, and royalties that come from streams or advertisements can be sent straight to the creator’s wallet.

The Opportunity: FUD spreads better as a headline than optimistic news, and sometimes you have to write both for the sake of confirmation bias. Plenty of people will continue to doubt the sustainability and longevity of NFTs, and they’ll resonate and be more willing to share stories about NFT mania crashing and burning.

Of course it’s also important to have both sides of a conversation, and the euphoria and insane bull run will end eventually. For example it’s important to spread the awareness of the energy consumption problems that NFTs contribute to, or the rampant copyright issues, or the fact that most NFTs use links rather than on chain solutions to display images. These conversations will continue to go on and develop solutions over time but there’s no signs that NFTs are unfeasible, only that these are bumps in the road.

Other NFT News and Highlights:

  • Louis Vuitton is releasing a mobile game which includes assets designed by legendary artist Beeple. You can collect the NFTs but not sell them

  • Mark Cuban’s NFT social Platform - Lazy.com is now synced with the Polygon chain, part of ongoing efforts in the space to lower gas fees for everyday transactions.

  • The company behind The Party of the Living Dead fractionalization, Fractional Art is expanding and they’re hiring!

  • Axie Infinity, one of the more popular “play to earn” NFT games, closes in on 1 million daily active users. The $AXS coin went from $3 in July to $40 today. Definitely a game to watch.

💁‍♂️Flip of the Week: Each week we’ll try highlighting a NFT play by someone from Twitter or the Non Fungible Times community and try to gain insights from it.

This week we’re featuring Me (@card7mike) on Twitter for selling my last Beeple artwork , a #27 mint of Infected this week.

Initial Purchase: $8200 in ETH January 11th

Cash Out Amount: $22.5k in ETH August 3rd, $14,300 profit (farewell sweet prince)

Thoughts: At peak mania on Feb 26th, this same Infected was valued at $288,000 (35x return). Do I wish I’d sold then? Kind of, but not really. This was my favorite one and I wanted to hold onto it for sentimental reasons. From the first time I saw it in January, I knew that out of everything on Nifty Gateway, this is one of the pieces that I really wanted, the art was super striking and also meaningful to me personally. Also you want to imagine that you’re not only motivated by money and that you’re also in it for the art.

But there were a couple of bearish signs for Beeple. One was that he never engaged with his community, outside of occasionally retweeting them and congratulating them on making tons of money. It was clear that he thought NFTs were fun and the whole thing was exciting, but he didn’t necessarily want to be a part of the crypto community. Another thing was that one of the reasons why his pieces continued fetching very high prices were “anchored” to some high 1/1s of his selling for $5-8 million and of course the infamous $69 million Christies’s sale. It was later revealed that Metakovan was responsible for that sale, and that he and Beeple had a pre-existing relationship. Once I saw the B20 project and the low level of commitment there, something smelled off about the whole thing, and I knew I had to get rid of this. I still waited an extra 3 months but ultimately, I knew I had to sell it.

Closing Notes:

I got tons of great feedback from YOU, our early readers last week. Common feedback themes included adding more interpretations on content, going into more detail rather than high level overviews of news stories, and using more numbers to bring home and make the messages more impactful. Did I succeed in implementing the feedback? What else would you like to hear about in next week’s article?

Let me know by hitting that reply button!