Research Summary
The report discusses the potential risks associated with investing in Non-Fungible Tokens (NFTs) during a bull market. It highlights the cyclical nature of bull markets, where Bitcoin typically outperforms first, followed by other coins or tokens. The report suggests that despite the potential for short-term gains, NFTs may not hold long-term value and could result in significant losses for investors.
Key Takeaways
Understanding Bull Market Dynamics
- Bitcoin’s Dominance: The report emphasizes that in a bull market, Bitcoin usually outperforms other cryptocurrencies first. This is followed by a rotation of outperformance by other coins or tokens, driven by varying narratives.
- Altcoins’ Performance: After Bitcoin’s surge, altcoins tend to outperform. The specific altcoins that excel can vary, and it’s uncertain whether new or old ones will lead the next bull run.
Non-Fungible Tokens (NFTs) and Their Risks
- NFTs’ Short-lived Momentum: The report predicts that if the crypto market continues to gain momentum, NFT trading will increase, leading to a brief period of growth. However, this growth is expected to halt before gaining any serious momentum.
- Loss of Allure: The report suggests that the allure of NFTs has faded. It argues that while NFTs have potential use cases, most valuable uses will have their value from the start, limiting the potential for significant returns.
- Public Perception: The report predicts that the public has learned from past losses associated with NFTs and will be more cautious in the future.
Actionable Insights
- Exercise Caution with NFTs: Given the report’s prediction of limited growth and potential losses, investors should exercise caution when considering NFTs.
- Understand Market Dynamics: Investors should familiarize themselves with the dynamics of bull markets, including the typical performance patterns of Bitcoin and altcoins.
- Consider Potential Value: When evaluating potential investments, consider the inherent value of the asset. For NFTs, this means considering the potential use cases and whether the value is present from the start.
