Is it possible for "people like you and me" to make a million dollars flipping NFTs? I take a closer look at Noah Kagan’s YouTube video on this topic.
- The video outlines a “quick-flip” strategy. This strategy is generally considered high-risk, but may bring quick profits.
- As described in the interview, there are 5 Steps for a successful flip: 1. Find a Great Project; 2. Vet the Project; 3. Get on the Whitelist; 4. Mint Your NFT; 5. Sell within 24-48 hours.
- A flipping strategy tends to work better when the NFT market is bullish. When the market is bearish, liquidity dries up and it becomes more difficult to find a buyer for your NFT.
- A quick-flip strategy is discouraged/frowned upon by some in the NFT community as it tends to encourage people to promote projects that may be low-effort or outright scams.
- Nothing in this article is financial advice and you should always do your own research.
On March 7, 2022, Noah Kagan, Co-Founder and "Chief Sumo" at AppSumo, posted an interview on YouTube with NFT influencer JPEG Lord with the tile "Asking An NFT Expert How To Make $1,000,000" (the full video is embedded below).
Before You Jump In
Before you start going through the steps outlined in the video, it’s important to understand what you are getting into.
The video basically outlines what you might call a quick flip strategy - one that is high risk, but could bring quick profits.
It’s not wrong, but tends to be discouraged
This kind of quick flipping is discouraged by some in the NFT community.
There are several reasons why it is discouraged, but generally the feeling is that it doesn’t support the idea of having a long-term view of the market.
And some of these highly promoted projects that attract flippers end up being without much substance (poor art, a roadmap that can’t be executed on, etc.).
At worst, some of these projects can even be outright scams (called “rugs” or “rug-pulls” in NFT parlance).
That said, there is nothing inherently wrong with pursuing profits - short term or long term.
We are all free to pursue our own strategies (so I’m not judging, I’ve done a bit of flipping myself), but you do need to understand that if you go down the short flip road, you are pursuing a high risk strategy that may take you to the darker corners of the NFT world.
Works better when the market is bullish
Another key point is that this strategy tends to work better when the NFT market is bullish.
That may sound like an obvious statement, but it is important to understand that it becomes much more difficult to sell an NFT when liquidity dries up in the market.
To successfully flip an NFT, there needs to be a buyer for that NFT. And during bearish periods, there are fewer buyers.
Level of Effort
JPEG Lord is a highly experienced NFT trader that spends a lot of time immersed in the NFT industry. In fact, right at the beginning of the video (around the 45 second mark) JPEG Lord states:
"I spend pretty much every single day researching, reading, and writing about NFTs"
The reason I bring up this point is that playing the NFT flip game may sound easy, but it does take work.
You may end up spending hours on Twitter and in Discords trying to find the next big break-out project and then grind to get on a “whitelist” (see Step 3 below) and still not find that jewel of a project (and you may even get rugged/scammed).
So please don’t think that NFT flipping is an easy street to millions.
Solana vs. Ethereum
Another point that I don’t think was well explained is that most of the projects mentioned in the video are on the Solana blockchain.
Solana is a fine blockchain (I have traded on Solana myself), but if you are used to trading on the Ethereum blockchain, then you may need to spend a bit of time getting familiar with Solana.
And if you are going down that road, check out this article:
That said, the steps below work perfectly fine for Ethereum based projects.
Steps for Flipping NFTs
The video outlines 5 steps for flipping NFTs. For each step, I provide some additional details as well as some of my commentary.
Step 1: Find a great project
Identifying a great project early is pretty much key to the entire flipping strategy.
And if you think about it, this is also true for many markets outside of NFTs - you are trying to identify a gem before the crowd realizes it is a gem. Buy low. Sell high.
But how do you go about finding such projects?
JEPG Lord responds by saying: "I find everything on Twitter" (around the 1:46 mark in the video).
- Related: NFT Influencers to Follow
Finding projects on NFT Twitter can actually be pretty tough to do. The constant noise of people promoting projects on Twitter can add to the confusion.
JEPG Lord goes on to say that you can work with your friends to start an "alpha group" to help each other sort through projects.
Which can be tough for someone new to the space.
So why does JEPG Lord put such heavy emphasis on Twitter and alpha groups?
Because as an influencer, he has a strong informational advantage through all the connections he has made in the NFT space.
In other words, it makes perfect sense for him to leverage this advantage.
So the key point is that if you are new to the space, it will take you some time to build up connections and then to leverage those connections to get better information.
Step 2: Vet the project
In Step 1 you are trying to identify a list of gems, but in Step 2 you are trying to dig a bit deeper to see if those gems are actually good projects.
Here, JEPG Lord lists 3 points in researching projects:
- What is the utility?
- Is the team capable of pulling this off?
- What Partnerships/Influencers are associated with the project?
Each of these are great points to research, but are easier said than done.
For example, a new project typically won't have the utility built out, so you end up trusting their "road map" to be accurate and truthful (and sometimes ...well, it's not).
As for the team, judging if they can pull it off is key, but even a "great" team can fail. And, by the way, these teams can be anonymous (or at least not fully doxxed).
Finally partnerships, influencers, and celebs can greatly pump a project, but there have been projects where these types of partnerships have fallen apart and the project has failed.
The point: this type of research is important, but no guarantee of success.
In the video, JEPG Lord even discusses a project that "checked all the boxes", but still didn't do well.
Step 3: Get on the whitelist
Oh, the lovely whitelists...
Whitelists are basically a way to get the "privilege" of buying an NFT before it goes on sale to the public.
I actually have an entire article on the topic:
But I'll mentioned a couple of things here:
Over the last few months, whitelists seemed to have gotten out of control. My Twitter feed is absolutely jam packed with whitelist promotions.
The reason is that whitelists are part of the promotional strategy of a project. And a project may ask you to jump through all kinds of hoops ... such as tagging "friends" on Twitter, commenting in Discords, and in general making enough noise to get you (and their project) noticed.
If the project is worth it to you - well, then go for it. Just realize that getting on a whitelist doesn't guarantee you'll be able to flip for a profit; however, the time you put in to get on that whitelist will be gone forever.
Step 4: Mint your NFT
This is where you actually buy your NFT.
So if you made the whitelist, you'll likely have a day and time (usually a window of time) to actually mint your NFT.
It sounds simple ... and it usually is simple .... unless you've falling into a scam. Because here is where you'll need to connect your wallet to the project's site to mint your NFT.
My suggestion here is not to have much more in your wallet than you need to mint the NFT (plus gas).
Another point is that sometimes you'll mint the NFT, but the actual art/image won't be shown until later. This stage is called a "pre-reveal". So you won't know if you minted a "rare" or minted a more run-of-the-mill NFT in the collection.
You also won't know if you've gotten involved in a low effort (or even a scam) project. Because at this point, you've paid for the NFT, but don't know exactly what you have received.
Step 5: Sell within 24 - 48 hours
At this stage, the project has been released to the public and, if you are following the recommendations of JEPG Lord, you want to sell quickly.
So why might this work?
Basically you are trying to sell to people that couldn't get on the whitelist, but are excited about the project. If there are enough of these people, then the price could go up quickly.
Also, if the project used a "pre-reveal" approach, then there may be people that want to buy your NFT with the hope that they will get a "rare" (a more valuable NFT in the collection).
But remember ... no guarantees here ... prices can go below the whitelist price.
As JEPG Lord notes in the video, he has had a number of big loses using this strategy.
A flipping strategy is possible, but works much better in a bull market where speculators are out in force bidding each other up.
In a bear market, liquidity dries up and it becomes much more difficult to sell an NFT (let alone at a profit). While it is still possible (there always seems to be breakout projects), the chances of a successful flip are much lower.
As for as making $1M …. Well, there are people that have done it, but most people don’t.
And remember, there are other approaches to the NFT market.
You can find projects you like and believe in and hold them long term.
It is not as flashy, but it is also less stressful. And you may even enjoy the communities you end up being a part of.
About the Author
Ed is NFTska’s lead Editor and Author based in the Los Angeles area. He fell deep down the crypto rabbit hole starting in 2017. Ed actively participates in and follows the fast changing NFT scene. Learn more about Ed.
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