Letter 16 - NFT Fatigue
on trimming down your portfolio, selling NFTs, and taking breaks
Trigger warning: one of the things I will be talking about is the issue/problems that can arise out of owning too many NFTs 😬 . I understand this is the absolute epitome of first world problems. We don’t discriminate here though - all problems are worth talking about..
Last night OpenSea went down. The website has been riddled with issues for weeks and is constantly bugging out or crashing, so this was no surprise. After a few moments of fruitlessly clicking ‘refresh’, something interesting happened. I went to the URL bar of my browser and typed: “reddit”.
Why is this interesting? Prior to diving head first into the NFT space I was a fiend for refreshing reddit. I would check it first thing in the morning, starting with the front page or /all page and then I’d check all my favourite subreddits. Then I’d start all over again and check to see if anything new had been posted, and occasionally find myself down weird subreddit rabbit holes.
Last night I realized that I hadn’t checked reddit for months. But instead of celebrating the victory of having kicked a time-sink addiction it suddenly dawned on me that I had simply replaced reddit with opensea. Instead of scrolling through the front page of reddit I would scroll through my account page on opensea. Instead of subreddits to check, I would check the floor prices and activity tabs of the collections I was most invested and/or interested in. Once I was done checking everything, I would do it all over again, and occasionally find myself down weird rabbit holes…
This ain’t healthy. It’s fun and occasionally beneficial, but it’s also addictive and there’s a fine line to be drawn. It is undeniably useful to check opensea for various pieces of information but do we really need to check the floor price of every thing we own 3x an hour? Probably not. It was also not such a big deal when I first got into NFTs and only owned 3 things and there were only 12 projects in total to monitor. Now I own 1000+ NFTs and there are 12 new projects a day. The landscape has significantly changed, and I think our approach (or at least mine as I can’t speak for anyone else) needs to change too.
I have on many occasions over the last week told myself that I need to start trimming down my NFT portfolio. This is an open-and-shut case of “easier said than done”. Why is it not easy to do? Well, I dunno exactly, but let’s dig into my mind and see what thoughts come out.
Selling NFTs is hard
NFTs are great. I love them. I love to see them in my wallet and I love that they can appreciate in value. I love the feeling of being a part of a community which I get from some projects. I love the utility that some offer. I love thinking about the future promises many of them have. By selling one that I like, I lose all of these things. “What about NFTs you buy purely for financial reasons?” - good question. The problem there, though, is that in a world where penguins can go from 0.01 eth to 2 eth in a week, where apes can go from 0.08 to 15 in a few months, and where artblocks can go from whatever to infinity, it is really hard to sell an NFT even if you have no emotional attachment to it. Every sale feels a bit like you might be selling a winning lottery ticket.
Every sale feels a bit like you might be selling a winning lottery ticket. It’s worth repeating. The NFT space is blurring the lines between investing and gambling in a way that even traditional crypto investing doesn’t. First you gamble when you mint and get a randomly generated NFT, hoping to “win big” and mint a rare one. Then you gamble on the collection as a whole. Then you gamble on the NFT space as a whole. I think of investing in NFTs as gambling the same way I think of poker as gambling. There is a lot of luck involved in short term success but over the long run the smart, patient and savvy players will succeed.
Arguably the most important skill in poker is quitting. Knowing when to fold a hand, and knowing when to quit a game where you no longer have an edge. If you flop top pair in poker and fall in love with the hand and never let it go you can end up losing large amounts of money to someone with a better hand when the smart decision would be to fold your hand at some point. You could be the best player in the world but if you’re playing when you’re tired, tilted, and playing your D-game while your opponents are playing their A-game, you will probably not be making money in that game. I would argue that the most important skill in the current NFT landscape is knowing when to sell / quit a project.
I don’t know when you should sell
This is a problem I struggle with myself, so to try and write about when I think you should sell would be like a blind person trying to teach you how to drive. Perhaps I could rely on my other senses though and think about some things that we might consider when deciding if and when we might want to sell some NFTs.
If you have too many. Obviously how many is too many is subjective but when it becomes unmanageable to stay up to date with what is going on in all the NFT projects you are invested in, it might be time to let a few go. I’m in so many Discord servers now and have so many notifications that it would give my fiancee Rachel an anxiety attack (she hates having unread notifications).
If the NFT no longer brings you joy or excitement. Quite literally taking a page out of Marie Kondo’s book - if an NFT no longer brings you joy it might be worth letting it go. Here we need to differentiate between NFTs we purchase purely for financial reasons and those we purchase because we find them appealing for other reasons - but I would argue that you shouldn’t be buying NFTs you dislike and have no desire to hold in your wallet should their financial value drop in the short term. That’s probably taking a too-simplistic view of things but if you’re looking to clean house (as I am) then throwing out (selling) the things that you don’t love looking at while scrolling through your opensea account is not a bad place to start.
If you are having difficulty sleeping at night. This is an important one and one I struggled with early on in my NFT journey. Sometimes you will invest in an NFT and the value will skyrocket. If you are fearful that it will come crashing back down and it is affecting you to the extent that your sleep is impacted, then it might be wise to sell. Yes you could be “leaving money on the table” but heck, sleep is more important than money. Yes you might have to live with some pangs of regret if the thing you sell goes on to moon even more, but you risk living with those regrets anyway if you hold on to it and it comes crashing down. Bankroll management is an important consideration when investing in any space and in NFTs it’s no different. Having all your eggs in one basket is rarely wise.
If the opportunity cost of holding is greater than what you expect to be able to make by utilizing the funds elsewhere after selling. Something I think almost everyone in this space can relate to is the feeling of having no eth in your metamask wallet with an upcoming drop that you are sure is going to be great and you simply must get in on. So you start looking through your wallet for anything you can list at floor price to get some quick liquidity to be able to take advantage of the opportunity coming up. Contrary to what you might think, I don’t think this sort of fire-selling is bad. I think it is important to remain somewhat liquid so you can take advantage of the opportunities that present themselves in this space - and there is no shortage of great opportunities (even now).
It is easy to fall into the trap of hanging onto NFT remnants of projects that have been treading water for days/weeks hoping that they will eventually moon. If doing so is at the cost of being liquid then consider cleaning house a bit. Another dangerous “trap” is holding on to something you believe will do well in the long run but it is at the cost of a dozen projects that you think will do well in the short-medium run. Unfortunately none of us have unlimited funds so we must pick and choose our projects. Everyone’s strategy for investing in this space will differ depending on the amount of time they’re able/willing to invest, the risk they’re willing to take on, and their goals. For some it absolutely makes sense to park money in the “blue chip” NFTs that are going to do well in the long run and not worry about too much else. For others though (generally those willing to take on more risk + invest more time) I think there is more value in playing the short-medium term game and using profits from those to funnel money towards the blue chips as your portfolio grows.
Take a break
The NFT space moves a mile a minute and even taking one day off can make you feel like you’re missing an eternity. Let me let you in on a secret - we’re still pretty damn early. You could fall into a coma and resurface in 3 months and you’d still be early. There will be no shortage of incredible opportunities over the next week, month, year, and probably even the next few years. So take some days off, or better yet, take a week+ off.
I am awful at taking time off. So this is very much a case of ‘do as I say, not as I do’. I’m fortunate enough though to have had some forced breaks built in to my life. Six weeks ago we had a trip to Turkey that had been planned since before I got into the NFT game, and next week we are going to Spain + Greece to celebrate Rachel’s 30th bday, another trip that has been in the works for a long time. I intend to be mostly absent from the space and use the time to spend quality time with her + recharge my batteries.
When I get back, I would like to have better work-life balance. It’s really, really hard to not want to dedicate all my waking hours to the NFT space. When I see what is happening and realise that it is literally possible to make generational wealth and change the world it is hard not to go all-in. But some things in life are more important. Health and family are two of those things. So I am going to try and take my foot off the pedal a bit going forward.
Not only is this likely going to be better for health & family life, it might even be better for the work I do in the NFT space. The thing that held me back the most in my poker career was burnout. I would play literally hundreds of thousands of hands in a few months, and then get to a point where I couldn’t play any more and had to take 2-3 months off (or worse, I would try to play through and end up losing money). Moderation is almost always better, albeit sometimes going full speed for a period also makes sense.
“Everything in moderation, including moderation.” - Oscar Wilde
There’s genuinely nothing on my radar so I will take this space at the end of my Newsletter to discuss a couple of my own projects. First up is my podcast Two Bored Apes which I started recently with my friend and fellow ape Jaime. Episode 2 was released a couple of days ago - you can find it wherever you normally listen to podcasts or at twoboredapes.com.
Secondly I launched my Discord server this week. It is for my upcoming education website Zenacademy - which I was initially intending to go live this month but have pushed it back until late September so that I can do things properly. In the meantime the Discord is a place for people to join the community early and discuss anything happening in the NFT space - we are extremely beginner friendly and welcoming to all, so click here to join and come say hi :)
We’re still early.
Disclaimer: The content covered in this newsletter is not to be considered as investment advice. I’m not a financial adviser. These are only my own opinions and ideas. You should always consult with a professional/licensed financial adviser before trading or investing in any cryptocurrency related product.