While many investors would like to brand high-value NFT portfolios as blue-chip, there are no established criteria for determining which project should be known as such.
A popular phrase that one may come across on Twitter and other crypto media is blue-chip nonfungible tokens. The word “blue chip,” which refers to stocks that have proven their mettle as a reliable extension of companies, is borrowed from traditional finance. What exactly are ,blue-chip NFTs, and how do you tell them apart?
Let’s take a look at some of the variables that go into identifying whether a particular NFT project is worthy of being called a blue-chip.
Volume of Sales
When deciding whether or not to trade an NFT collection, investors must consider both the overall amount of sales and the ensemble’s total market capitalization. Collectors view a NFT collection as having achieved blue-chip status when it reaches or surpasses the sought-after 10 Ether mark.
Another piece of data used by NFT traders to determine if the market is healthy is the overall volume of transactions.
Are high volumes sustainable and indicative of blue-chip status? Nansen updates its blue-chip index on a monthly basis, knowing that the market is “young and fickle.” As a result, when a collection rockets to the moon with no apparent end in sight, there is often debate within the NFT market.
On April 16, the first proof-of-profile collection, Moonbirds, was launched by PROOF Collective. The project has already surpassed $220 million in total volume sales on OpenSea and has gone to the moon.
Despite the fact that the project has only been listed for a week, its rapid expansion has led some NFT experts to speculate its worth and others to believe it is already blue-chip status.
However, some experts disagree with the notion that volume is a predictor of blue-chip statistics. Some NFT investors feel that comparing this data point to a measure for such an illiquid asset is difficult, and they consider a blue-chip NFT to be one that can withstand a bear market.
Other NFT enthusiasts have identified prominent figures and major players in the industry as being helpful in determining which assets they should fill their bags with.
Blue-chip status isn’t determined by numerical criteria alone; rather, it’s defined by the community’s sentiments and dedication. Trades may be copied, but communities are not.
The first number typically looked for in a project’s adoption is the number of unique holders. However, even as a quantifiable measurement, it isn’t the most dependable.
The number of unique holders is simply recorded by counting the number of wallets belonging to each holder. As a result, one owner may have 1,000 assets in their wallet and place them there, but only one individual has those assets.
Because they represent individuals with varying levels of belief and convictions regarding the project and within the ecosystem, communities are more than simply numbers.
Yuga Lab’s Bored Ape Yacht Club (BAYC) was a bootstrapped community that accomplished what it had not intended. BAYC, which amassed over $1 billion in total volume within just under a year, gained the attention of worldwide mass media.
Moonbirds flipping other blue chips in total volume would make it one by default if the volume and number of unique holders become a static focal point for what is regarded as a blue-chip. MoonBirds have already amassed over 6,681 investors out of a pool of 10,000 NFTs and the most lucrative former Moonbird owner has made almost $2 million selling 45 MoonBirds.
Some of the most successful investors have earned more than $450,000 to date. It’s frequently said that an asset’s value is determined by what buyers are willing to pay for it, and occasionally the market’s view about this pricing can alter dramatically.
Market value and market capitalization are frequently interchanged, making the true worth of an NFT dicey. Market value is subtle that it gives a broader perspective on a project’s financial position, but it also determines investors’ investment opportunities.
Surprisingly, market value is influenced by both investor and industry perception. However, it is also affected by market mood and attitude. NFT market price movements may be observed in total sales volume, growth, and membership voting with their assets by selling them.
NFTs are still in their infancy, and they’re fickle because BAYC, the largest blue-chip NFT thus far, hasn’t even celebrated its first birthday. Despite this, it has shown itself to be capable of surviving and increasing in value over time.
Liquidity in the sector frequently spreads from one project to the next, resulting in certain assets remaining hard to sell. Although NFTs may differ in price over time, if they are sold for a profit at or below market value, their value is maintained.
The market value for a cryptocurrency can be complicated. It can be based on how people feel about it and how traders view it, as well as the overall market for cryptocurrencies.
As a result, it’s reasonable to assume that assets will decline and become risky. Despite the danger, many NFT enthusiasts continue to put their money where their beliefs are, blindly or more intelligently in the hopes of earning a blue-chip investment.
Time appears to be a significantly weighted element when it comes to determining whether an NFT has achieved blue-chip status, rather than simply price. This indicates that monitoring the asset over time rather than focusing on short-term performance in order to validate a project’s present value.
In the cryptocurrency market, NFT investors will have their own sets of standards for what constitutes a blue chip. Quarterly total sales volume, buyer and seller proportions, and the project roadmap or community developments should all be considered as elements of blue-chip status.