A Macro Economic Look at NFT Investing. How BTC and ETH Swings Effect the Marketplace!
Posted On January 20, 2020
It’s best to understand all risks and factors that move a market before parking your hard earned money there.
The topic of this tutorial is how BTC or ETH swings effect NFT marketplaces.
Decentraland has been trading for 2 years with consistent volume. From 100,000 to 1,000,000 MANA traded daily in Digital land, ($3,000 to $100,000 when MANA was $0.10), we have a good set of data to observe.
How does an NFT market react to the currency used to buy them spikes up or down?
Sometimes BTC goes up 10-20% in one day, shocking the market and destroying alt coin prices in its wake.
Most alts are as low as they were before they started their bull run in 2017 and it’s all because all eyes are on BTC’s next move.
When BTC was mostly trending down, MANA saw great stability and for the most part stayed at around $0.10.
During these times we’ve had some crazy pump/spikes as you can see rocketing the price to 2-3x in one day!
What we noticed was an increased desire to sell land from many people who wanted to cash out in fiat.
Currently the floor is 12,000 MANA, ~ $380 USD, (MANA @ $0.032)
If MANA spikes up to $0.20 hypothetically, then that same land is $2,400 USD!
Usually when prices reach a high Eth or Fiat price, liquidity decreases as they are no longer cheap enough to many investors.
So in order to sell that land, he might decide to drop it to 8,000 MANA asap. That’s still $1,600, way more fiat than $380 USD!
This is what has happened in cases like these. When there’s sudden MANA movements, the LAND market in Decentraland seems to react. Unless the MANA movement is coming from a high interest in land from a favorable announcement.
Decentraland is unique in the sense it has it’s own MANA token that is effected by BTC and external markets as opposed to other NFT’s where ETH is mostly used.
Bitcoin is the master when it comes to Cryptocurrencies. Whether you love it or hate it, you can’t avoid the fact that many alt coins including Ethereum are directly affected by BTC swings, whether up or down.
Historically, whether there’s a large BTC swing upwards OR downwards, ETH has taken a hit until there’s more stability in the market.
You can see what’s happened compared to BTC over the last 2 years while BTC has continued to downswing for the most part of that time phase.
The yellow phases are times of stability and this is where we’ve seen stable volume and attention for NFT’s.
We know people within the crypto community are mostly short term, impatient investors so whatever the spotlight is on at the time, that’s where we see most of the action.
So if BTC swings, we see people dump some NFT’s.
When NFT’s find some stability and get some record sales and growth, it moves upwards.
That being said, the NFT market is REALLY small compared to the overall cryptocurrency market.
Last 7 days, we’ve seen about 2,500 ETH volume. That’s $350,000 TOTAL in 7 full days?
Compare this to volume from the top 10 cryptocurrencies,
Most are in the Billions!
As the infrastructure grows, I’m sure more attention will come to NFT’s which is also the purpose of this blog and tutorial videos.
We could be extremely early investors in a space that is about to BOOM.
Considering the money and community is there in the crypto space to move over to NFT’s.