The past week saw a resurgence in demand, both for new collections and older established projects as they continue to deliver on their roadmaps. Here’s how to use Moby to make the most of these runs.
⚠️ Disclaimer: This is not financial advice. Mentions of projects do not constitute an endorsement and should not be interpreted as an indication of future performance. Always do your own research (DYOR) in addition to using NFT analytics tools such as Moby.
Spot moving NFT projects using volume and price
As collections that launched in the last quarter start delivering on their roadmaps, there’s renewed interest as they’ve demonstrated the ability to execute. In collections with limited liquidity (where most holders got into the collection by minting, or there’s just little ongoing demand), volume is tightly correlated with price in both directions. Low volume puts downward pressure on price; if holders want to sell in the absence of demand, they may start undercutting floor prices just to be next in line for a sale and get some ETH out. Inversely, high volume can create upward pressure on price as demand increases (based on hitting a new milestone, increased hype, effective marketing, etc).
With so many new and established projects out there, how do you get in on the action at the right time? The Moby explore feed is your best tool to spot collections that are starting to see increases in demand.
The explore feed will show you all significant movements across all NFT collections. The market moves fast, and interest in a collection can quickly fade and move onto the next shiny object. Try focusing on 30 minute and 1 hour sales volume movements to stay ahead of the curve. This is an interesting metric to look at as it tells you where capital may be flowing.
Here’s an example collection that we’ve discovered moving on the Explore page. Because volume is often tightly correlated with price movements, you can use Moby’s real time graphs to easily see how volume and price interact and develop over time. We see a sharp uptick in volume (grey bars), followed by a steep increase in price (1).
Subsequently, demand waned, followed by a decrease in average price (2) that continued on a slight downtrend. A new volume spike (3) then kicked off another sequence of upward price momentum. Because Moby shows you real-time data and graphs that update the second a new sale hits the blockchain, you can spot these patterns before anyone else.
It’s always important to supplement with other sources to figure out what’s causing these movements and see how sustainable they are. Check Twitter and Discord to figure out what’s getting people bullish. Did they launch something? Are celebs or whales buying into it? Did they update the roadmap? Announce exciting collaborations? Remember to DYOR.
Getting out ahead of volume and floor price drops
So you bought into a collection and plan to flip instead of hodling. How do you know when to get out without staring at graphs or OpenSea all day? You can use Moby’s contract-based smart alerts to let you know when there are significant volume or price movements in a collection. It’s a good time to pay attention when an alert goes off. With real-time smart alerts, you won’t miss any market movements in either direction.
NFT lifecycle phases and two common dips to watch out for (or take advantage of)
NFT projects typically go through several phases. If you’ve been buying NFTs for a while, you might already be familiar with them.
- Presale mint (aka whitelist/allow list/mint list mint). The window where an approved list of people can mint ahead of the general public at their leisure.
- Public mint. Remaining supply, if any, is released for the public to mint. First come, first served.
- Post-mint. The period immediately after the available supply has been minted.
- Pre-reveal. The general period after minting is over, but before the NFTs have been revealed.
- Reveal. When all metadata is revealed.
- Post-reveal. The period immediately after reveal.
The phases above can be summarized as the periods revolving around two main events: mint and reveal. Most NFT projects experience two dips after these events during the following phases:
We’ll take a look at why next. Of course, this is just a generalization, as every NFT collection is different. Some don’t have a presale. Some reveal immediately post-mint and thus have no pre-reveal period. Others have a long pre-reveal period. And some are “fungible” and thus aren’t affected in the same way.
Post-mint dips and minting dynamics
The current dynamics around new mints feel similar to the period from August through October 2021, where you could instantly flip anything you minted for a profit. As the NFT space grows, more people will be happier with smaller profits on quick flips, leading to more demand for exit liquidity right after minting is over.
One of the most common patterns we see in our data at Moby is that people are happy quickly flipping mints (we’ve Tweeted about this here). This doesn’t say anything about the long term potential and viability of the project—it’s just the nature of a fast-moving market. After all, taking profit is always a win, whereas holding can be riskier due to more external factors affecting supply and demand.
The above graph is from a collection with limited (2500) supply. It quickly minted out, and many people weren’t able to mint any. This “leftover” demand will now have to be satisfied on a secondary market like OpenSea. This creates some initial upwards price pressure (1). Once this demand is satisfied, the price finds an equilibrium, and as excitement wanes, the price continues its downward trend (2).
This downward trend can further cause people to sell, often below mint price or even at a loss, as an attempt to de-risk and preserve capital. Once flippers and paperhands are out, this becomes an opportunity for bulls and those who weren’t able to mint to buy in at a discount, pushing the price back up again before the reveal.
This all happened in less than an hour, so up to date and real time information is crucial in situations like these. If you know what to look for, you can use this to your advantage to time your entry and exit around a release.
Post-reveal dips and rarity
The current meta around rarity means that unrevealed NFTs are essentially loot boxes or unopened trading card packs*. People want the chance to pick up rares.
The pre-reveal phase (1) is typically characterized by the post-mint price equilibrium. After NFTs reveal and people find out what they own, many will want to get rid of their commons and try to pick up rares instead (2). This once again causes a floor dip (and another opportunity for people who are bullish on the project to buy in).
* for NFT collections that have rarity
Whew, if you made it this far you’ll have a good grasp of the basic patterns you can encounter in the NFT market. It’s important to be aware that any collection can behave completely differently, and the movements depend on a lot of external factors. Stay safe, trade well, and never invest more than you’re prepared to lose. NFTs are high risk, highly volatile and oftentimes illiquid assets. None of the above content in this article is investment advice.
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