NFT Flipping Strategies
NFT flipping is a popular trading method where traders buy NFTs at a low price and sell them at a high price. Usually, the aim is to hold the assets for a short time to make a quick profit.
In order to succeed in flipping, you must be able to spot NFTs that are undervalued at a given time. The market offers such opportunities all the time. Any approach that serves you to locate undervalued NFTs work for this. In this article, we introduce three of them.
Flipping Strategy #1 Buy an NFT with rare attributes for the floor price
This method works best for the Profile Picture collections (PFPs). These are collections like Bored Ape Yacht Club or Moonbirds where there are 10,000 NFT items with different attributes. Some NFTs in these collections are rarer, hence more valuable, than the others. In this flipping approach, your aim is to identify those rare ones with lower sales prices in comparison to the other more common assets in the collection.
We’ll use some website resources for this. The first one is the world’s largest NFT marketplace OpenSea. Every NFT collection minted on the Ethereum blockchain has a secondary market on this platform. In addition, Solana, Polygon, and Klaytn NFTs are also listed on OpenSea.
Let’s first start with the definition of the floor price. It is the most affordable price of an NFT collection. You can see the floor price of a collection on its OpenSea landing page. For instance, the floor price of Moonbirds, at the time of writing, is 20.99ETH.
Which Moonbirds NFT would you invest in, given that you have the means to cover the floor price? We’ll use a resource to check the rarities to determine which assets are rarer than the others in this collection, Two websites are popular among rarity tools: rarity.tools and raritysnipper.com. Not all NFT collections are listed on both websites. For instance, our example, Moonbirds, is listed on raritysnipper.
By clicking on the “Buy Now” button, you can see all the available NFTs you can purchase, compare their rarities, and spot the ones that are undervalued. In the price tabs, you can enter the maximum price you’re willing to pay and filter the results accordingly. Also, choose “Price: Low to high” in the sort tab to see the NFTs with the floor price first.
In this example, Moonbird #1601 has the rarest attributes among assets, with selling prices close to the floor. Hence, we should prefer purchasing it over others if our main purpose is flipping.
Other popular rarity tools, Rarity.tools, and Looksrare, function in a similar manner.
Flipping Strategy #2 Mint at a very low price
Another way to make a profit by NFT flipping is buying the NFTs when they’re minted for the first time and selling them in a very short time in the secondary market (OpenSea) immediately after the launch.
This basically means you must find a way to get on the whitelists of the project to receive a guaranteed spot in the private mint before the public mint.
According to a study by Chainanalysis, OpenSea trading data shows that those traders who make the whitelists and sell the newly-minted NFTs can gain a profit of 75.7%, while those who trade NFTs without making the whitelists can only make 20.8%.
A whitelist is a list of individuals who were guaranteed to mint an NFT project. Teams of NFT projects choose to build whitelists primarily in order to reward the most loyal members of their communities.
There’re some common approaches to loyal membership. One is to distribute whitelist spots to the owners of previous NFTs from the same project. In this case, the team reserves some of the early access spots, for instance, half of it, to the holders of those specific NFTs. This was the case with the well-known CloneX collection, for example. This collection was released by RTFKT Studios, which had previously dropped other NFTs. The holders of those NFTs were eligible to mint the CloneX NFTs in the first place.
Another way is to distribute the NFTs to the most active members. The activities can include creating fan art for that NFT project, promoting and marketing the project, participating in events held by the community, or any other activity that you help to grow the NFT project.
Flipping Strategy #3: Become an expert on blue-chip projects
Blue-chip NFT projects are those with the highest floor prices. You can view them on OpenSea under the stats tab found on the homepage.
Once you’re there, click on the floor price to sort the results per the highest floor. This is the way to see the most valuable NFT collections at a given time.
The logic of this flipping method is as follows. When you choose a project in demand, you can liquidate it easily. Usually, a high floor price is an indicator of high demand. The holders of these projects are diamond hands, which basically means that it’s quite unlikely that they will panic sell if the market experiences big drops. That’s why history has shown that the bluechip NFT projects sustain their portfolio values over time.
Become an expert on its assets, their rarities, and average and floor prices over time by examining the collection of your choice closely. And wait for the market to offer a discount to sell later with a profit.
Whether you buy your NFT on the mint day or from a secondary market, the first thing to do is to list it on a secondary market like OpenSea. To find a buyer quickly, you can market your NFTs on the official Discord Channels of those NFT projects.