Welcome to the wonderful and wacky modern world, where you can make more money in a day than most make in a month by selling NFTs.
Don’t believe me? NFTs are big business these days, with monthly trading volumes having grown rapidly in 2021.
In the first half of the year, trading volumes came in at an impressive, but comparatively modest, $64 million. In the following half of the year that jumped more than ten-fold to $750 million.
Nowadays, NFT trading is a multi-billion dollar industry ($41 billion, in fact) with thousands being traded daily, some for huge sums of money. Many of those sales will be ‘flips’.
That is, NFTs that have been purchased by a buyer and held only for a short time before being resold, or ‘flipped’, for a quick profit.
It’s certainly an attractive proposition, but a risky one at that. If you make the wrong purchase you could be saddled with an NFT worth considerably less than you paid for it.
So, how do you flip an NFT successfully? You’ve come to the right place: we’ve compiled a handy guide on the need to knows. But first, for those of you who may have missed it: what is an NFT?
What Is An NFT?
NFT stands for ‘non-fungible token’. In other words, it’s a unique digital asset that belongs only to you. Artwork is the most common form of NFT by some distance, but you can also buy music, videos, and, surprisingly, tweets.
Like cryptocurrencies, they use blockchain technology, which allows them to be transferred from owner to owner. As a result, a robust market for buying and selling NFTs popped up soon after they first became popular.
NFTs can either be standalone or part of a larger collection. Because of their inherently rare nature, they can act as something of a status symbol, which drives up demand.
Many have observed that NFTs, particularly the most sought after, confer upon their owners a sense of exceptionalism as they belong to an extremely exclusive online community.
How Profitable Is NFT Flipping?
To put it bluntly, there’s a lot of potential to make money here. NFT CryptoPunk #8348 went for just over $450 when it was sold in late 2017, but is now worth $171 million according to most recent estimates.
Another good example is the Bored Ape Yacht Club collection, which would have set you back just 0.08 ETH when the series first launched in early 2021.
At the time, that would have equated to approximately $200 per NFT. Since then- in part due to sales and popularity amongst a range of celebrities- Bored Ape Yacht Club NFTs have sold for a million dollars or more.
That being said, this isn’t a get-rich-quick scheme, either. You might stumble upon the next big NFT series, and make a thousandfold profit, but that is extraordinarily unlikely.
Rather, you’re more likely to be dealing with smaller sums, buying undervalued or promising NFTs and selling them on for modest profits.
The market is becoming increasingly oversaturated, though, so that’s why flipping NFTs isn’t easy. If it was, everyone would be doing it, after all.
The 8 Key Things To Consider When Buying An NFT To Flip
Most of the skill in flipping NFTs successfully comes from having an eye for a promising NFT project, and buying before it takes off. Here are some of the main factors to consider:
Is there a perk or benefit offered to owners? Some NFTs, for example, give their holders a chance to meet and greet with celebrities.
These perks, if they’re interesting enough, can create a buzz around an NFT and help to generate demand, which of course makes them more valuable.
It’s one of the most fundamental rules of economics: supply is a foundational factor in an item’s value. The more of something there is, the less valuable it will be, and that’s certainly true of NFTs.
You’ll want to look for an NFT project that has a fairly limited number in circulation
It goes without saying that you’ll need a good idea of your budget going in. Some of the most popular NFT collections have a floor price of six figures, which is going to be way out of reach for most aspiring flippers.
At the other end of the spectrum, some collections have a floor price of just a couple hundred dollars.
The Original Creator(s)
When buying an NFT to flip, you’ll need to make sure that you can trust the person or people that you are buying from.
Do your own research and if you don’t think the project is trustworthy and credible, steer clear. An anonymous creator should be an immediate red flag.
There are an awful lot of scams out there that you’ll need to avoid if you’re to successfully flip NFTs.
An association with or endorsement from a major company or well-known celebrity drastically increases an NFT’s chance of success. Bored Ape Yacht club, to cite a popular example, is in demand due to known buyers like Logan Paul and Jimmy Fallon.
Is there a buzz about this particular project in any online community? Checking Reddit, Twitter, Discord, and others is a good way to gauge the popularity of an NFT project. Make sure you’re looking for engagement, too.
In a sense related to community, it’s important to have an idea of how many people are buying and selling the NFT(s) that you have your eye on. Clearly, you’ll need a fairly buoyant market in order to find a buyer for your flip.
Last but by no means least. Assuming you are buying an artwork NFT, the art itself should be considered.
It’s not necessarily the quality of the artwork that you’re looking for, it’s a degree of uniqueness or ‘brand-ability’. Think Weird Whales, for example. The more unique an NFT’s aesthetic, the more it will be worth in the long run.
When To Buy
An absolutely critical part of successfully flipping NFTs is making sure that you are buying in a bull market. If you’re not sure what a bull market is, it’s basically just a market that is trending upwards.
You can check the volume (see also ‘What Is Volume In Stocks?‘) of NFT sales on a few different sites. OpenSea sales/volume is a good port of call, but websites like Nonfungible.com and nft-stats.com are also good sites to monitor the state of the market.
Cross-referencing a few different sites is also the best way to get the broadest view of the state of the market.
You’ll also need a bit of patience, as the NFT market can be quite volatile. It’s no good rushing out and buying when you notice the market trending upwards only for it to fall again the next day.
Waiting a few days can confirm the direction of the trend, but don’t wait too long! Like we said, NFTs can be volatile, and the market is liable to dip again in the not too distant future.
As with all investments, you want to buy low and sell high. If you get the knack of timing your purchases, you have a better chance of flipping your NFTs for profit.
Buying Your NFT
When you have found an NFT that you think has promising flip potential, there are two ways to buy it. You can either mint an NFT upon release, or you can buy off of a secondary market like OpenSea.
Minting is the ideal way to gain ownership of an NFT. It means buying it upon release, and becoming the first owner. Usually, minting means that you can get your hands on an NFT for an extremely low price, or possibly even for free.
Of course, this way, you’ll maximize your profits.
The issue with this is that good-quality NFT projects are often extremely difficult to mint (see also ‘How To Create An NFT Minting Website‘). Supply is limited, and competition is often fierce. Therefore, the best way to mint an NFT is to put your name down early on a project’s whitelist (see also ‘What Is An NFT Whitelist?‘).
You might have to meet some kind of eligibility criteria, but once you’re on the whitelist you’ll get guaranteed access to minting.
Once you’ve got the NFT in your possession, it’s super easy to transfer it to a secondary market where you can list it for a higher price- or, in other words- flip it.
Buying On a Secondary Market
If you’ve missed the minting boat, so to speak, that doesn’t necessarily mean that you’re too late! You can still buy an NFT off marketplaces like OpenSea. Here’s what to do when you’re on the site:
- Search for the project/collection you have in mind.
- Once you’ve found the project’s page, select ‘Items’, and then ‘Buy Now’, to see what is for sale. Filter by price, with the lowest priced appearing first.
- Identify an NFT or NFTs that you believe are currently undervalued or are likely to see an increase in value. The best way to identify potentially undervalued NFTs is to compare them against others in the collection. If there are a handful valued at less than the majority, these may well be undervalued (see also ‘How To Find Undervalued Stocks‘), and a good opportunity for a flip.
- Check the NFT you’re planning to flip by selecting it and viewing ‘Properties’. It will give you all its vital information. The rarer the NFT, remember, the higher the value.
- Check the project’s ‘Activity Tab’ to see the project’s liquidity. The more people listing items and the more people buying them, the better. In an ideal world (and for a super quick flip) you’ll want there to be transactions every few minutes. This means you should have no trouble finding a buyer for your NFT.
Avoiding The ‘Rush’ After Minting
As we said earlier, timing is absolutely critical when it comes to flipping NFTs. Remember, you want to buy low and sell high, and what is the absolute peak of many NFT’s value?
That’s right, in the hours and days immediately after minting. When a project is first released there is usually an insane amount of hype, and all those who couldn’t mint rush to get their hands on what they believe could be the next big NFT collection.
This artificially inflates the demand, and therefore, the price.
It’s not always the case, of course, and by not rushing in early you may indeed miss the chance to get your hands on what might go on to be an extremely valuable NFT for a relative bargain price. But it’s rare.
The vast majority of NFTs do not go on to be worth millions. So, to save yourself money, wait for a few days after a project mints. Nine times out of ten as the hype dies, so will the price, and you can purchase for significantly less.
This is when all your hard work in identifying an NFT project to flip may pay off. Hopefully, the price will tick up again, and you can flip your NFT for a profit.
Filtering By Trait
As we mentioned previously, one of the most important factors in selecting an NFT with solid flip potential is the artwork itself, particularly regarding its uniqueness.
So, one method that some successful flippers use is to snipe NFTs based on their traits. You’ll still want to have a collection in mind, though, as filtering through every NFT is going to be more than a little time-consuming.
You can use rarity tools to do this, or you can just do it via the collection on OpenSea. Ideally, you’re going to be looking for traits with say, less than a hundred results.
Remember, rarity equals potential profit in the NFT flipping business. Having said that, you don’t want to filter too narrowly, either.
Searches with only a few results are, of course, going to be so rare that they are much more expensive and much less liquid.
Again, when you’ve found a search result that gives you a good number of results to work with (60, say, would be perfect) you want to try and spot any outliers.
Those that appear underpriced compared to their peers may make great flipping opportunities!
Buying NFTs On A Budget
This is an extraordinarily time-consuming method of buying NFTs. However, it’s also the most cost-effective and profitable option. It’s particularly helpful if you’re just starting out and don’t have a lot to play with.
So, what is this method? It’s a method of obtaining goods that’s nearly as old as time. Rather than paying the listed price for an NFT, you ‘lowball’ the seller and make them an offer below the asking price. It’s a bit of a scattergun approach, though.
You’ll have to have done your research on literally dozens of NFTs that you like the look of (which means hours of research), and then making offers on as many as you can afford to at a time.
To do this you’ll need to wrap your Ethereum (ETH) and convert it into Wrapped Ethereum (WETH). Don’t worry, they’re worth exactly the same, it’s just how marketplaces like OpenSea allow their users to make pre-authorized bids.
In other words, it allows you to make an offer and leave it, with no further action necessary on your part. Just like with, say, eBay.
There is a problem with this method, and you might have spotted it already. That’s right- the vast majority of sellers aren’t going to be interested, and will turn you down.
You might make fifty offers and not have a single bid accepted, and with the amount of work you put in, that might seem disheartening. But don’t worry!
Eventually, you’ll notice that some people will bite and accept your offers. It might not be many, but even if it’s 1 in 30, it’ll be worth it.
You’ll almost certainly be guaranteed to flip those NFTs that you’ve gotten for a bargain price for a profit, and you’ll be able to slowly build up a bigger pot to work with in the long run. Who said bargain hunting was easy?
As you build up your pot, you might actually find that it’s easier to convince people to accept lower offers when the original asking price was higher.
For example, offering 4.5 ETH for a 5 ETH NFT is more likely to yield success than an offer of 0.8 ETH for a 1 ETH listed NFT. This is because you’re offering 90% of the asking price with the first offer, but only 80% with the second.
Nevertheless, you still get to make a bigger saving with the first offer (0.5 ETH) than the second offer (0.2 ETH), and this all adds up in the end.
Just make sure you’re not wasting your time, or anybody else’s for that matter, making offers that have no chance of being accepted. By that, I mean offers that are 25%-50% less than the asking price.
A Sales Technique For Flipping Your NFT
At the end of the day, successfully flipping an NFT for profit comes down to a good old-fashioned bit of salesmanship.
Some of the tactics that salesmen and retailers use to sell their products every day are just as applicable to trading NFTs. Just think of flipping NFTs as a digital version of wheeling and dealing.
What are we talking about? Yes, we’re talking about that most common of sales tactics- listing an item for slightly less than a round number. In other words, listing an NFT for, say, 0.999 ETH as opposed to 1 ETH.
There’s a reason the shops price things at $99.99 as opposed to $100, and that’s because it works. Try it for yourself. You’ll be amazed at how much more quickly an item listed at 0.999 ETH will sell than one listed at 1 ETH.
It’s just basic human behavior, and even the most savvy shoppers are prone to fall for it.
Another top tip would be to not get too greedy. Obviously, it’s tempting to buy an NFT for 0.5 ETH and sell it for 1.5 ETH, especially if you know that others in the same collection are listed at a similar price.
You could definitely try and sell at that price, but you’ll be unlikely to get a quick flip. There probably isn’t much buying and selling going on at that price point.
Instead, the art of flipping an NFT quickly relies on having an instinctive understanding of where price walls fall for certain NFTs. For example, try selling that NFT you bought for 0.5 ETH for 0.99 ETH.
You’re still more or less doubling your money, but you’re selling at an attractive price. Once you go over that price wall of 1 ETH, that same NFT will be an increasingly hard sell.
Ballies Origins NFT- An NFT To Flip For Beginners
If you’re interested in a recommendation from us, we’d recommend the Ballies Origins series. This NFT series consists of just 9,999 completely unique tokens.
They are themed around basketball players, with each NFT having its own distinct characteristics and being classified as either basic or rare.
Some $4m worth of thIs NFT collection have been traded on Crypto.com (see also ‘How To Delete Crypto.com Account‘), where the collection is hosted. It’s a great choice for beginner flippers, as the floor price is a mere $220. Even if you make a few mistakes, the stakes aren’t too high.
We hope that you have enjoyed our guide on how to flip NFTs successfully. Going in armed with these tips should be super helpful, but be mindful of the fact that flipping NFTs involves a learning curve.
The longer you do it, the better you’ll get, and you’ll probably find things that work for you that don’t work for others. Even then, you’ll probably drop the ball on a couple of occasions.
Just remember that flipping is an inherently risky business, and that even if you follow all these tips you might just have a bit of bad luck. All that being said, best of luck flipping!