You’ve likely seen or heard of Axie’s success. In short it’s blockchain based game that allows users to monetize their gaming experience. In developing countries gamers are making their monthly salary’s in weeks. The earliest users realized the biggest gains, including a young kid who used the profits to purchase two homes.
In some cases they are funded by investors overseas and are splitting the profits. Someone in my private discord referred to this as “human yield farming”. Given the current NFT gaming fueled mania some investors believe we may be approaching a market top. I disagree and I’ll explain why in this short write up.
With the success of Axie, other NFT gaming platforms will move forward at lightning speed to compete for market share. This means rapidly iterating, a strong marketing push, and more monetization opportunities provided to users. Additionally, expect to see more social media influencers and youtubers publish NFT gaming content. Either they’ll independently jump on the hype in hopes of growing their channels or they’ll be paid to produce content. Moreover, users don’t have to risk much capital to realize life changing gains. This will make the NFT gaming opportunity more attractive to risk adverse investors and those from humble beginnings. Also, stories of people making life changing gains will circulate widely and attract more users. People like the young man who purchased two houses will inspire others to experiment with games in their early stages. This will flood the NFT gaming market with new users.
Another driver of this upcoming rally will involve profitable NFT gamers recycle gains into altcoins. This new cohort of gamers coming into crypto will quickly realize the massive return potential of low cap altcoins. In hopes of multiplying their gains from NFT games, they’ll attempt to flip altcoins.
The DeFi infrastructure makes it very easy and simple for people to get exposure. No KYC is required, tokens get listed very quickly, and DeFi is accessible to almost everyone with a mobile phone. Since many of these gamers are likely to come across NFT gaming tokens first, I suspect their capital will initially flow into gaming tokens. Eventually this capital will trickle out into the broader market, lifting most altcoins.
Most games require users to buy their native token to access premium features to improve their gaming experience. Additionally, users will buy tokens to gain a competitive edge over their in-game adversaries. This creates a demand outside of pure market speculation. As opportunistic investors begin taking profits, avid gamers will help create an organic price floor. However, I want to emphasize that these games will not be immune to market cycles. Reflexivity works in both directions. As some point gamers will get bored or they’ll begin cashing out profits. As the token price falls, the volume on exchanges will evaporate. This exodus of players will usher in a bear market and only quality projects will survive.
The delta variant is catching headlines and is likely to result in another round of lockdowns. Assuming this materializes on a global scale, people will have more free time to play NFT games and trade crypto.
Also, for those financially impacted by the lockdown it’ll be an opportunity to make up for the losses. Consequently, volume across all exchanges will skyrocket. This rally will be supported globally because all users will have access to DeFi application regardless of their geography. For example, the Binance Smart Chain is home to many NFT gaming projects. Users can use the Trust Wallet to connect to and access BSC DeFi protocols like PancakeSwap. Since Trust wallet is a mobile application, all 3.8 billion smart phone users will be able to participate in the mother of al rallies.
In my private discord channel I told my members I was opening a long because the market looked ready for bounce. This was right before BTC rallied to $40K.
It’ll take a few more weeks to a month to restore confidence and flip investors to risk on. Seasoned investors have already started to reaccumulate and are likely flipping NFTs as they wait for more market participants to reenter. People currently sitting on stables will inevitably feel the FOMO once the market continues to rips higher. This will amplify the pump and we’re likely to move up faster than the previous rally. Many who sold at lower prices will try to compensate by chasing high risk, high return tokens. Also, as people see their portfolio balloon their appetite for risk will increase as they pour profits into long tail assets. Given this is the last wave of the market cycle, we’re also going to witness an influx of undisciplined retail investors. Unlike the early phase of the cycle where quality is bought up, in the late stage we’re going to see the exact opposite. This rising tide of capital will lift everything up including NFT gaming tokens.
You can either chase individual tokens in hopes of out performing the general market or you can buy indexes. One of my favorite index providers is Indexed. They have a NFT index product, ticker NFTP. The portfolio contains ENJ, MANA, AXS, SAND, AUDIO, SUPER, GALA, RARI, AND NFTX.
Another index worth considering is MVI on IndexCoop. This index contains AXS, ILV, ENJ, MANA, SAND, and 13 others.
Lastly, I’ve created a channel titled NFT trading insights within my discord. If you’re interested in chasing alts and collaborating with other traders make sure to drop by.