Flipping NFTs is one way to make money in the web3 economy. According to Fortune, the NFT space is worth over $41 billion and averaged a $750 million monthly trading volume in the second half of 2021. Despite the bear market of 2022, the figures remain encouraging.
One can still make money while learning how to flip NFT. But first, one must deeply understand NFTs to maximize them. This guide will explore everything beginners need to start flipping NFTs profitably.
What is Flipping NFT?
NFTs (Non-Fungible Tokens) are digital assets that live on the blockchain. Users can easily sell NFTs over a supportive network like other blockchain products. NFT flipping refers to buying an NFT asset and quickly selling it at a higher price.
Selling the NFT at a higher price guarantees an immediate profit. Though, one can earn more (if the value continues to rise) if they sell the asset a little later. However, not selling the NFT immediately can result in a loss if the value drops.
It’s important to know that trading is not the same as flipping. Flipping usually refers to short-term trades where one buys low to sell high. Traders may buy an NFT asset now and sell after a month – this isn’t flipping.
NFT flips are risky, but if one plays the game well, one can stack up massive profits in a short time. It is important to remember that other people want to make money from flipping. So flippers need to have the right strategy that protects and maximizes profit.
Participating in the NFT flip space requires keeping up daily with the market to spot high-volume NFT projects with potential. Flippers also need to do research and make decisions under time pressure.
More steps and activities go into flipping NFT, and I discuss them in the following section.
How to Flip NFT?
Buying and selling NFTs may take minutes or days, depending on how fast and accurately one does proper analysis. The whole process can be scary for a beginner, but there’s no reason to be scared.
With dedication and practice, newbie flippers, too, can make cool money flying around in the NFT space. At the same time, they have to be patient. Experience is very important in NFT flipping; it only comes with time.
Theoretically, the whole process is simple. One shouldn’t gun for the big projects off the bat – beginners shouldn’t take too much risk at the start. But it’s better to start at a smaller scale for easy management.
To flip NFT long-term, one must become comfortable with the risk involved. The following steps will increase a beginner’s chance at a profit.
Step 1: Deciding on how to buy
There are two main ways one can buy NFTs to flip. Flippers can either mint a new project when it drops or waits till it’s available for sale on a secondary marketplace. Either way, a marketplace like Opensea will serve one’s needs.
Minting an NFT project means buying an NFT immediately after its release from the primary source. NFT projects are cheap at minting and can sometimes be free.
Though, it’s important to know that the higher an NFT project’s quality, the limited the supply. Such high-quality projects are also difficult to mint. So, to get into an NFT project at the mint, flippers must do everything they can to get on the whitelist.
The whitelist of NFT projects guarantees access once they mint. But different projects have varying prerequisites for their whitelist. But one requirement common to all projects is joining their Discord channel.
If the project has potential, the value will soar once it enters a secondary marketplace. Flippers can then sell at this point.
Flippers can also buy NFTs when they are early on secondary marketplaces like Opensea. To buy from the secondary market, it’s vital to buy the NFT at the right time, as the next step explains.
Step 2: Buying the NFT at the right time
The NFT market is volatile. There are bullish and bearish periods. So, checking for weekly trading volumes on trusted sites is crucial.
OpenSea marketplace also shows how listed projects are faring over 24 hours and 7 days. The ranking gives a general overview of different projects.
It’s best to buy when the trading volumes are low and show signs of moving up. Doing this maximizes liquidity – one has a higher chance of selling for cash. An uptrend in the charts means high demand, which means one can promptly sell for profit.
Step 3: Buying the Right NFT
‘DYOR’ is a common term in the NFT space. One shouldn’t ape into an NFT project because someone on Twitter is talking about it. Flippers must ‘Do Your Own Research’ – DYOR.
Doing personal research helps one understand everything about projects of interest. Also, since flippers bear the responsibility and risk of their decisions, they research till they’re comfortable with any project. We’ll do a deep dive into how to choose the best NFTs to flip in a later section.
One can always begin research on the page dedicated to each project on Opensea. There are links to the project’s social media pages and website.
Step 4: Setting the right price
Beyond getting the right NFT to flip, setting the right price is vital. The right price guarantees profit while staying competitive. To make quick sales, flippers can set their prices slightly lower than others.
Setting the right price also depends on the floor price. Opensea displays the floor price of an NFT right next to it, so users can easily make purchase decisions.
Another consideration when setting the price is the ‘gas fee’ – the profit should cover it. The Entrepreneur talks in-depth about psychological pricing for anyone not great with pricing.
Step 5: Flipping NFTs
For beginners, starting to flip NFT requires confidence. With a budget between $200 and $1000, one can start flipping NFT on Opensea.
The learning and research never stop when flipping NFT is done for a living. You will learn many new things about the best way to flip NFTs. So, it’s important to start flipping upon understanding the basics.
In addition, patience is important because it can take about 3 days for an NFT to sell. But if someone is lucky enough, it can sell immediately as well n, and I’ll detail how to pick the best NFT to flip.
How to Choose the Best NFTs to Flip?
When researching promising NFTs to flip, one must consider these factors.
To profitably flip NFT, utility is key. Utility refers to the asset’s use cases. There are numerous uses for NFTs.
Some NFT projects may offer whitelist spots to other larger projects or grant access to an exclusive club. The list is endless.
The benefits determine the value and generate buzz and demand for the project. As cliché as it sounds, successful NFT projects are those that can generate enough hype – and value plays a major part here.
Number of Tokens
Supply directly impacts value. Highly profitable projects have low fixed supplies. Low supply increases the value of the NFT as more people want to own a piece.
One must ensure that the team building the project can be trusted. Hence, flippers check the track record of each founder. Participating in the project of shady founders can make one fall victim to a rug pull.
When buying from a secondary marketplace, flippers check the project’s current trading volume. Low trading volume means not many people are interested in the project. One must steer clear.
Web3 projects rely heavily on ‘community.’ The stronger the community supporting the project, the better. So, when flippers check a project’s Twitter or join their discord, they want to see a community of people who believe and passionately support the project.
There’s no point eyeing projects trading at a floor price – starting price – one can’t afford. For beginners, it’s best to go for projects with lower floor prices.
The project’s association
In the NFT space, some entities and companies have built solid reputations. Such heavyweights in the NFT ecosystem are Bored Yacht Club, Logan Paul, Jimmy Fallon, Yuga labs, etc. So, flippers can rest assured if a new project is associated with these companies.
Most NFTs are digital artworks. The quality of the artwork can also influence how much people love it / appreciate it. Though, this can be tricky. For instance, highly pixelated artworks may not get many followers, while 2D lego-like artworks pull massive communities.
It takes time to flip NFT profitably, but one can make several thousand dollars. All NFT flippers need is a wallet – Trust Wallet or Metamask, and they’re good to go. Once flippers fund their account and sign up for the Opensea marketplace, they start researching NFT projects.
Most importantly, newbie NFT flippers must connect with the community. They should make friends in the space, ask questions, and always do their research.
Finally, one shouldn’t get too attached to a project. If the signals are bad, it’s critical to move on. There are more NFTs to flip.
Frequently Asked Questions
If one’s NFT doesn’t sell, it can remain listed on the secondary marketplace for a long time. Canceling the listing incurs another gas fee – which is a loss.
One must ensure that the project has lots of hype and is in high demand. Combining high demand with smart pricing guarantees sales. Hence, it’s important to do due diligence before buying any NFT.
That’s why it’s advisable to sell at a slightly lower price than the competitors. For instance, if the ideal price to sell an NFT is 1.0ETH, one should check for what price others are selling the same NFT.
It is better to go for a slightly lower price if many others are listing for the same price. For example, one can list an NFT for 0.99 ETH. There’s not much difference between 0.99ETH and 1.0ETH.
When flippers list an NFT at a lower price, the marketplace will most likely rank it higher. Also, buyers are more psychologically inclined to buy cheaper NFTs. In this case, mentioned above, buyers save 0.01ETH.
Lastly, it’s important to do some marketing. Letting people know about having a particular trending NFT for sale can make a difference. Sometimes, it’s not enough to list on Opensea or Rarible.
Adding trending Twitter hashtags to tweets helps reach a wider audience. The same goes for making announcements on Telegram and Discord platforms.