📉 NFTs just crashed. What's next?

GM everyone. This is 2036, the crypto newsletter that pays you.

Here’s what we’re serving up today 🍲: The NFT market imploded over the weekend. Some collections are down -70%. Here’s what happened - and 5 lessons to remember along the way.

Let’s dig in.

🥔 Today’s meat and potatoes

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Last week, we interrupted your regularly scheduled programming to tell you about the biggest NFT drama of the year - the mint of the new Azuki collection, Elementals.

Azuki is the 3rd most famous profile picture (“pfp”) NFT collection - just after the CryptoPunks and the Bored Ape Yacht Club.

Last week, they released their hotly anticipated third collection - Elementals. And it was a total disaster.

The collection looked like a duplicate of their first collection. You can read the full story here.

Since then, the floor price of Azuki NFTs has crashed from 17 ETH (∼$34,000) to 6.5 ETH (∼$12,800) at the time of writing:

Elementals, the new collection - has dropped from 2 ETH (∼$4,000) to 0.8 ETH (∼$1,600)

But it looks like the contagion has spread into the wider NFT-land.

The Bored Ape Yacht Club floor price has fallen from 40 ETH (∼$80,000) to 30 ETH (∼$60,000) in a week, an unusual 25% drop for such an established collection that once traded for over 150 ETH (∼$600,000 at the time).

In times like these, there are 5 lessons we like to keep in mind here at 2036.

1/ NFTs are leveraged bets on Ethereum.

A low-risk way to bet on NFTs is just to hold ETH.

Because if bitcoin is like the Catholic Church - unwavering and devoid of (most) innovation - Ethereum is like New York City.

It’s constantly growing and innovating. It has the biggest banks, the most billionaires, the hottest brands, and celebrities. It even has its own currency - ETH.

And NFTs are like property in New York City.

The most expensive property - the Bored Apes or Cryptopunks - is like Manhattan real estate.

And right now, there’s a housing crisis in New York City.

2/ The best time to buy is when there is blood in the streets.

Maybe things will get worse in NFT-land from here. Or maybe it’ll all be over by the time this reaches your inbox.

We don’t know. All we know is that:

• to make money, you have to be contrarian and right (buy when others aren’t)

• strong communities are built in tough times

A lot of NFT projects want to become “culture” 2 days after being listed. But building valuable communities takes time:

Ethereum is having the time of its life. Staking on Ethereum is increasing, and revenue for the network is exploding.

Some NFTs will outperform ETH. Others won’t. But those that do will go through tough times - and come back.

3/ Don’t be greedy.

The easiest mistake to make in crypto is to only buy “the next hot thing.”

To disregard Bitcoin and ETH because they’re not sexy enough.

But:

• 95% of coins and NFTs are complete scams

• 99.5% of all projects don’t make it to the next cycle, no matter how hyped they are today.

I learned that lesson painfully when I loaded up on EOS at $12 in 2018. It had $4 BILLION of funding. It was the next Ethereum-killer.

5 years later, it’s worth 70 cents.

A good crypto portfolio is 50% BTC, 50% ETH. Those are the giants that survive.

Some NFT collections have stood the time of time, too. And some memecoins will probably be around for a while. Just be mindful of the additional risk you’re taking on.

4/ Hold for the long term.

This one is self-evident. Don’t use leverage. Stay in the game.

5/ If you make life-changing money, use it to change your life.

The market goes in cycles. We’re holders, but everyone’s situation is different.

If you need the money or if selling will fundamentally alter your life, don’t roundtrip all your profits back down to 0.

Crypto is great at taking your money and their dreams and turning it into their money and your dreams.

Don’t diamond-hand out of obligation, guilt, or irrational optimism.

Take care of yourself and your family. Use your profits to invest in your health and experiences with your loved ones.

And then keep riding the train. Keep making more money and re-investing your gains for the long term.

We’ll be here all along.

🍨 Dessert

Stories to read if you have FOMO

1/ Azuki holders vote to claim refund for Elementals mint

2/ The German Central Bank may need a bail-out

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