There are now a wider variety of assets in the crypto market than there were during the last bear market.
Instead of choosing to invest in different types of Cryptocurrencies, people can choose to invest in NFTs and digital land in the metaverse.
It seems reasonable to assume that these new, experimental assets are riskier compared to BTC and ETH. While it’s hard to measure risk objectively, we can use on-chain data to assess price volatility.
It is a good time to compare crypto assets, NFTs, and metaverse land to see which would be the best investment going forward.
Abe invested in Bitcoin, Bob in Ethereum, and Cathy in XRP. We will compare the three investors in this article. Abe invested in Bitcoin, Bob in Ethereum, and Cathy in XRP. They each put their money into a different asset class within the crypto space exactly one year ago.
Abe’s portfolio: 50% BTC & 50% ETH.
Bob’s portfolio: 50% BAYC & 50% CryptoPunks.
Cathy’s portfolio: 50% Decentraland Land & 50% Sandbox parcels.
The following comparisons are not exactly the same, but are close enough to be considered reasonable. We have created three portfolios that are each 50% different, which we will explain in more detail later.
We will look at how each investor’s portfolio did and why some investments are more stable than others.
Abe’s Token Portfolio
An advantage of investing in tokens rather than NFTs is that they are liquid and divisible. This means that we can easily see how much each one is worth in USD, buy any amount we want, and be confident that we’ll get a good price for it.
Today, BTC costs $38,567 and ETH is $2,667 — also rounded to the nearest hundred, so $38,600 and $2,700, respectively. BTC was $35,900 a year ago and is now $38,600 while ETH was $2,200 a year ago and is now $2,700.
The token investor chose a good time to buy tokens. The market was roaring after the Coinbase listing on April 13, 2021, and the Federal Reserve dropping interest rates to 0.25% to stimulate the economy. However, the market was sent crashing temporarily due to a wave of strict regulations in China. This is when Abe bought tokens.
Abe bought Bitcoin and Ethereum when their prices were low, investing $50,000 in each. He ended up with 1.39 Bitcoin and 22.7 Ethereum.
Abe continued to invest until Nov. 8, 2021 when the value had reached $203,767.52.
The enthusiasm for cryptocurrencies started to decrease as people became less willing to invest in risky assets.
At the beginning of the year, the Federal Reserve increased interest rates by .75%. This is the largest increase in interest rates in the past 28 years.
The war in Ukraine created a negative economic environment in February, which caused the crypto market to experience a drop in value.
It seems as if the blockchain industry is in for a tough time, judging by the recent flash crash of Terra Luna. This event has led many to believe that more car wrecks, so to speak, are on the horizon for the blockchain industry.
These events have caused the prices of BTC and ETH to go down. For most people who are not familiar with crypto, these assets represent the “price of crypto.”
On June 28, 2022, the value of Abe’s portfolio, consisting of 1.39 BTC and 22.7 ETH, had decreased by 45.8% to $54,197.7. The value of the portfolio had dropped by 73.4% from its all-time high.
The NFT Portfolio
NFTs are unique and collectible, although they are not as liquid as BTC or ETH. In a better market state, NFT holders can also get a certain dollar value from their investment.
As of June 2021, the NFT market was valued at around $250 million. This is a significant increase from the $30 million valuation in January 2021.
- Germination and construction period:
In 2017, the world’s first NFT project, Cryptopunks, was created. This project was created by OpenSea and it has made it more convenient to trade NFTs. The applications for NFTs have also expanded from just games and artworks.
- Expansion period.
The sales of Axie Infinity were rising rapidly in 2021, which drove the growth of the NFT market. BAYC was also established in the same year and came into the public eye.
This is the perfect time for Bob to enter the market, when NFTs are in their infancy. NFTs have a rule that the sooner its attributes are rarer, the higher the value, and the lower the price is more balanced. (The NFT trading market is immature and the transaction frequency is low.)
BAYC and CryptoPunks are two of the most popular NFTs in terms of trading volume in 2021.
If Bob buys 1 BAYC (3.5713 ETH) and 1 CryptoPunk (28.9191 ETH) on June 28, 2021 at an average price, his initial investment would be worth $71,478.88 at that time.
The worldwide economic development in 2021 was heavily impacted by the pandemic and the fiscal easing in major economies caused inflation and currency devaluation. People turned to crypto markets, such as artwork, NFTs, and BTCs, for stability. The NFT market saw a continuous increase in trading activity from August to March 2021.
The Land Porfolio
Cathy can be considered an early adopter of the metaverse because she was interested in it in June 2021. At that time, the word “metaverse” had not yet become a household name.
Facebook’s rebranding to Meta was still 4 months away.
Is the metaverse some new version of Second Life? Do you need a VR headset to access it? Almost nobody who isn’t deep in the crypto rabbit hole already knows.
Although it was not immediately apparent, the foundations for Decentraland’s success were being laid. On June 4, Sotheby’s opened a virtual gallery in Decentraland, and the game made headlines as the first to break 1 million in a metaverse land sale.
On June 28, 2021, Cathy purchased an NFT in Decentraland. This was one of 37 NFT sales in Decentraland, which generated a total of $148,500.
By looking at the public blockchain, we can see all the LAND that was sold on a given date.
The average sale price on June 28 was about $4,000, which is a reasonable assessment looking at these sales.
HOW TO BUY NON-FUNGIBLE TOKENS (NFTS)
How to Buy NFTs
- Purchase Ethereum
Since most NFTs are Ethereum-based tokens, most marketplaces for these collectibles only accept Eth tokens as payment. If you already have an account with a cryptocurrency exchange, you can purchase Ethereum on it and send your crypto to your MetaMask wallet. If you don’t have a crypto exchange account, Coinbase and eToro are good options for beginners.
- Connect your MetaMask to OpenSea or another NFT Marketplace
There are many marketplaces to buy and sell NFTs. Depending on which marketplace you choose, you’ll be able to purchase different types of art or collectibles. A lot of these websites have secondary marketplaces with a variety of NFTs, but each platform operates slightly differently. For example, MetaMask is an Ethereum wallet available via chrome extension and mobile app. To sign on to OpenSea (and other NFT platforms) you’ll need an Ethereum wallet. For maximum security, it is recommended that you link your MetaMask to a Ledger hardware wallet to mitigate the risk of hacks. Simply download MetaMask, set up a wallet and send over the ETH you just purchased from Coinbase. If this is your first time interacting with crypto wallets, check out the free Crypto & DeFi 101 guide for an in-depth video walk through. Ledger is a hardware wallet that stores a variety of different NFTs altcoins.If a user wants to buy an NFT from a creator that is not listed on Opensea, they can contact the creator through the marketplace’s Discord server. A software wallet cannot offer the same level of security as a Ledger Nano S, which costs $79. In the NFT space, hacks are unfortunately common. OpenSea is a marketplace for NFTs that operates on Ethereum. To use the platform, you need a web3 cryptocurrency wallet such as MetaMask. Your Ethereum wallet address acts as your username and password, letting you interact with certain platforms like OpenSea. Once you’ve connected your wallet, you’re ready to start browsing the market and placing bids! Other popular NFT marketplaces include:Opensea is the best marketplace on this list because it supports the widest range of collections and has the most liquidity.
- Buy Your NFT
purchasing an NFT is a simple process if you have already funded your account. Most NFT marketplaces work similarly to an auction, so you would need to submit a bid for the NFT you want to purchase. However, some marketplaces operate more like an exchange where they use the highest bid and lowest ask for NFTs that have already been printed. A perk of purchasing an NFT from the primary marketplace is the potential resale value immediately after the product is put on sale. Some NFTs can be high in demand and, as a result, sell for 5 to 10 times their original price. The downside to buying NFTs from the primary marketplace is that it is difficult to estimate the demand for the art. However, on the secondary marketplace, you can compare your purchase to previous sales.
What is an NFT?
Fields in an NFT typically include the token’s unique ID number, its owner’s wallet address, and the smart contract address that minted the token. An NFT is a blockchain token that is used to authenticate digital ownership of an asset. The asset can be anything, and the token allows the owner to prove that they own the asset. The token is assigned a unique ID number, and the owner’s wallet address is also stored on the token. The smart contract address that minted the token is also stored on the token.
NFTs make it possible for artists to release work digitally without the fear of counterfeits. You may be able to copy the image file from another person’s NFT, but it would not be considered authentic. Also, NFTs often give holders access to exclusive events. For example, Bored Ape Yacht Club has thrown private concerts and parties for token holders that include an open bar. In order to attend one of these events, you must own a mutant or bored ape NFT.
As the cost of non-fungible tokens (NFTs) rises, the clubs that create them become more exclusive. Members of the Bored Ape Yacht Club, for example, include Stephen Curry, Snoop Dogg, Jimmy Fallon, Post Malone, and The Chainsmokers. These celebrities often display their apes by using them as their profile pictures on Twitter, which gives the club more exposure.
Demand for a non-fungible token drives its price in a manner similar to how demand for fungible tokens, like Uniswap or Chainlink, does. Many non-fungible tokens (NFTs) get their value from social capital, perks that come with owning them, and other ownership privileges, to name a few things.
NFTs can be used to establish ownership of digital media and other digital assets. Unlike regular cryptocurrencies, each NFT has a unique value, making them non-fungible. Bitcoin and Ethereum are examples of regular cryptocurrencies, which are fungible because each BTC or ETH has the same value as any other BTC or ETH.
NFTs can be expensive, but you’re not just paying for a JPEG file. The token gives you ownership rights to the piece, and you can sell your NFTs on marketplaces like OpenSea and Nifty Gateway. Saying NFTs are just JPEG files is like saying a Google image of Van Gogh’s The Starry Night is the real thing. NFTs have value because they’re the “original”.
How to Buy Metaverse NFTs
To purchase land in either Decentraland or The Sandbox, you will need to make an investment of over $1000. However, during times of extreme demand, prime real estate may cost 6-figures.
Since there’s a lot of real estate in Upland, you can buy a piece of land for a relatively small amount of money. The best locations are worth more, and there are many to choose from. You can use the game’s currency, UPX, to buy and sell land. If you start playing now, you’ll get a bonus of 6,000 UPX.
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