6 Mar 22 – How Long Will An NFT Bear Market Last?

Would you HODL or sell?

The signs were telling, but now I think it's a clearer sign than ever that we are now in NFT bear market territory.

  • Projects with hyped demand (by Twitter/Discord following and engagement) are failing to mint out, which really makes you wonder who are these people and what are they after

  • Even if they do mint out, the 5X and 10X multiples are long gone, and you can see paper hands or people regretting their decision after an hour

  • For projects that were incredibly hyped, they've also seen a major correction from their highs e.g. Invisible Friends, HAPE, Karafuru

  • Even with the so-called "blue-chips" aka BAYC, MAYC, Clone X, Azuki, there has also been slight correction or what some might consider consolidation of ETH into more reliable and trusted projects

If you're feeling the pain from HODLing some NFTs that have failed to perform, I'm not here to reassure you that prices will go back up. Rather, take this opportunity to appreciate what is life outside of this NFT space.

Several weeks ago, we didn't have war. If you're feeling the pinch from losing on NFTs, know that in some parts of the world, people are worried if they and their loved ones can survive the day. If you're even thinking about NFTs, remember that it's a privileged position to be in.

I spoke with a Russian friend whom I've met over NFTs, as she shared how they were lied to by Putin who promised they would not be affected by sanctions. Yet, they live their lives with constant fear and worries, even though the decision of war was never by them.

War is terrible, whichever side you're on. Perhaps it's not about the aggressor or the victims, but that we are all the same. That we're mere passengers on this world for a finite amount of time, trying our best, making the most of our time.

Back to NFTs. Given that we're in such a situation, how can we react to it?

Personally, I've sold some a little and am sitting on ETH and biding the next moment. While that's an enviable position given that we've pulled back, it's also a tricky position to be in because it's about finding my next entry.

For many, it can be a very comfortable position that they end up not entering at all. That is also the surest way to miss out and then FOMO into the hype. My recommendation: Don't try to time the bottom. It all boils down to two things: Skin in the game + HODLing power.

Skin In The Game

As with crypto, my advice for anyone looking to buy their first NFT/crypto is to just do it regardless of price. Bull market and hype? Sure get some, because it can go higher. Bear market and pull back? Sure get some, and then wait for it to recover.

If you're sitting on the sidelines thinking that there's a better moment, you'll always think that way. So just get some skin in the game, however small that position is. Once you have that, you can always decide whether or not to increase your position if the market pulls back further.

HODLing Power

As with any sound investment, it all boils down to HODLing strength. Note, derivatives and trading are different. But with spot crypto and NFTs, if you don't sell, you'll at worst be holding a losing position.

Now, this is not to promise you that a losing position will definitely recover. But assuming that you bought equities, crypto, or an NFT that is here for the next decade, there's a high chance prices will recover and climb higher, as long as you can afford to HODL.

By that, it means that you will not need to liquidate it for any currency so that you can get by daily life, which is also why the typical advice of "don't invest more than you can lose" applies here as well.

Surviving The Bear Market

With that said, I already have skin in the game, and can afford to hold out with my liquidity a bit longer, and I don't have to FOMO in. If I do miss out on good bargains, it'll still be a mental hurdle to get over. But I believe that liquidity is important, because it also allows me to HODL existing "assets" that I believe in for a longer time.

The bear market is gonna be tough, as will the war. And in such times, it's about hunkering down with your mates/closed ones, staying positive, and believing that "this too, shall pass".

If I can give any bit of optimism, my gut feeling is telling me that NFT bear markets might be shorter than usual i.e. we'll not see a two-year long crypto winter as we did from 2018 to 2020. This is because the constantly development in the NFT space drive use cases and adoption, and as we see an increase in users, it'll inadvertently mean a recovery of the market.

NFTs will not be going away so soon. Treat every turn of event as a learning opportunity, and that's how I plan to mature in the space. Good luck!