Non-fungible tokens (NFTs) have exploded in popularity recently, with NFT sales reaching $25 billion in 2021. As the NFT market grows, many people want to buy NFTs as investments. However, the value of NFTs can be subjective and volatile. So how to spot valuable NFTs? Here are some tips:
Understand what gives NFTs value
To identify valuable NFTs, you first need to understand what makes them valuable in the first place. Some key factors that contribute to an NFT’s value include:
- Provenance – Who is the creator and original owner? NFTs from established artists or celebrities tend to be more valuable.
- Scarcity – How rare is the NFT? Lower mint numbers and limited editions are more valuable.
- Demand – How much demand is there for the NFT collection? More interest and active bidding raises values.
- Utility – Does the NFT give you access to anything special like exclusive content, airdrops, or voting rights? More utility can increase value.
- Aesthetics – For art NFTs, visual appeal matters. More eye-catching and well-executed artwork tends to be valued higher.
Look for rising star creators
One strategy for finding valuable NFTs is to discover rising star creators before they become hugely popular. Up-and-coming artists who show strong talent and promise can see their NFT values skyrocket once they gain more mainstream success.
- Follow NFT communities on platforms like Twitter to stay on top of buzz around emerging artists.
- Look for creators getting support from influential collectors.
- Check market data on sites like CryptoSlam to show to spot valuable NFTs rising creators based on rising sales and floor prices.
- Trust your own instincts and artistic taste – would you want this art on your wall?
Getting in early with a promising creator while their work is still affordable can pay off hugely as their career takes off.
Research established collections
For lower-risk NFT investments, it’s smart to stick with established, blue-chip collections with proven value. These are NFT series from prominent artists, celebrities, brands, or intellectual properties that have stood the test of time.
Some things to research around established collections:
- Sales history – Look for steady rising floors and strong secondary market performance. Collections with sustained value over time are safer bets.
- Holders – Look for collections with large, devoted communities of long-term holders who appreciate the NFTs for more than just investment value.
- Roadmap – Does the team/creator have plans to drive future value with things like IP development, metaverse integration, exclusive airdrops, etc?
- Mainstream attention – Big names and recognizable brands (like Adidas or Nike) lend credibility and tend to attract more widespread interest long-term.
Here are some of the top established NFT collections to consider:
Bored Ape Yacht Club
World of Women
Another crucial step is verifying the authenticity of any NFT you plan to purchase, especially from secondary markets. With valuable NFTs, there is a risk of counterfeits and fakes.
Here are some ways to confirm an NFT is legit:
- Buy directly from the collection’s primary marketplace if possible.
- Check the collection website for official links and verify the NFT metadata.
- Inspect the seller’s profile and transaction history for red flags.
- Join official community channels like Discord to get help from moderators.
- Use respected NFT marketplaces like OpenSea or LooksRare that verifies collections.
- Search for the NFT on NFT verification tools like Tokenproof or Autograph.
- Inspect the blockchain transaction details closely.
Taking these steps protects you from wasting money on fake NFTs that are not actually linked to the underlying artwork and have no value.
Analyze market data
Analyzing sales data and marketplace analytics can also identify promising how to spot valuable NFTs collections with rising value. Some key metrics and trends to research:
- Floor price – Check for upward floor price momentum. Rising floors indicate increased demand.
- Volume – Look for jumps in trading volume and sales, which signals more market interest.
- Activity – Active bids and numbers of holders/transactions shows engagement.
- Listings – Declining numbers of NFT listings can indicate scarcity and rising prices.
- Social sentiment – Gauge community hype on platforms like Twitter by looking for rocket emojis and rising followers.
Online tools like CryptoSlam, DappRadar and NonFungible are great for charting NFT marketplace data to uncover trends.
Time your purchases strategically
Timing your NFT purchases appropriately can also help maximize returns:
- New mints – Try to buy at mint or immediately after before prices surge.
- Market dips – Look for price corrections and downturns as good short-term buying opportunities.
- Major announcements – Buy around major project launches, collaborations or Givebacks that boost visibility and perceived value.
- Peak hype – Sometimes it pays to wait for hype cycles to die down before entering a collection at lower prices.
Like any market, timing is critical in NFTs. Understanding when to enter, when to hold, and when to take profits is key to investing wisely.
Diversify across multiple NFTs
Since the NFT market is still highly speculative, it’s wise to diversify and lower your risk, rather than staking everything on a single NFT. Ways to diversify include:
- Buying multiple cheaper NFTs from promising projects vs trying to afford 1 expensive NFT.
- Investing across different sectors – art, collectibles, metaverse land, utility, sports, etc.
- Balancing longer-term blue chip holds with some flipping of short-term trades.
- Saving some of your NFT budget for airdrops which are “free” new assets.
A balanced NFT portfolio mitigates your downside risk and increases the chances that a few of your assets will surge exponentially in value.
Look for How to spot valuable NFTs aligned with your interests
Rather than chasing “hot” NFTs, it can be more rewarding to buy NFTs that align with your personal interests and values.
- If you’re an art lover, research the top NFT artists in genres you appreciate.
- If you’re a sports fan, browse for licensed collectibles from your favorite leagues and teams.
- If you care about fashion, explore digital wearables and metaverse avatars.
When you buy NFTs that truly resonate with you beyond their investment value, you’re more likely to become a long-term holder and join the project’s community. This helps sustain an NFT’s value.
Use trusted platforms and markets
Where you purchase NFTs also matters for avoiding fraud and maximizing price transparency. Some trusted platforms include:
- OpenSea – The largest NFT marketplace. Contains most collections and highest liquidity.
- Coinbase NFT – Clean UX and strong security from a major crypto brand.
- Rarible – Leading peer-to-peer NFT marketplace. Mint your own creations.
- SuperRare – Specializes in tightly curated digital art NFTs.
- Foundation – Community-centric marketplace for independent artists and collectors.
- MagicEden – Top NFT marketplace for Solana NFT collections.
Stick to reputable platforms for buying and selling NFTs safely. Always be wary of scams on less known sites.
Understand the risks
While the upside of gaining from valuable how to spot valuable NFTs is immense, there are also considerable risks involved in speculation. Be prepared to:
- Accept extreme volatility in asset prices week-to-week.
- Lose entire investments in hyped projects without lasting value.
- Pay hefty blockchain gas fees for purchases, transfers or sales.
- Identify and avoid “rug pulls” where founders disappear with funds.
- Prevent asset theft by hackers via strong wallet security practices.
By educating yourself and only allocating reasonable investments, you can navigate the NFT market in a responsible yet profitable way.
How to spot valuable NFTs takes research, market savvy, risk-taking and luck. But the rewards can be tremendous for buying promising NFTs early and holding them as adoption continues growing. Use these tips to make smarter bets and build an elite NFT portfolio with standout gems aligned with your interests. With prudent investing, the explosive growth of the Metaverse offers potentially life-changing wealth creation through non-fungible tokens.
- How Non-Fungible Tokens Work And Where They Get Their Value – Forbes Advisor
- Non-Fungible Tokens (NFT) – Beginner’s Guide – Decrypt
- How to pick the right NFTs to make money on your investments
- How to find valuable NFTs: A beginner’s guide
- 5 Tips for Spotting Valuable NFTs – Decrypt