Let’s take a look at the portfolios and trading habits of the biggest NFT whales to see where value truly comes from. Spoiler alert: it’s not BAYC.
It’s been nothing short of a cataclysmic year for the NFT market. A new report recently revealed that 95% of the collectible jpegs that had the market in thrall throughout 2021 have now lost value.
However, despite a downward market turn, many NFT investors are still in profit by a large margin, with 20 of the top NFT whales holding portfolios well above $4.29 million on Ethereum alone.
A new report by CoinGecko reveals that the most valuable NFT portfolio currently belongs to SethS, who holds 11,748 ETH, or $19.23 million, at the time of writing.
The second most valuable portfolio belongs to the pseudonymous ‘Wilcox’, who holds 11,336 ETH, or $18.55 million, in NFTs.
Let’s take a look at what’s inside their bags.
A vast majority of NFT whale portfolios derive value from CryptoPunks, which account for at least half of the value of the top 18.
CryptoPunks were released in 2017 by Larva Labs, a software company created by two former Google employees. There are 10,000 algorithmically generated pieces in the collection, each depicting a unique pixel character. The collection was one of the first to obtain ‘blue-chip’ status in Web3 and it inaugurated NFTs into popular consciousness.
At the time of writing, CryptoPunks holds a floor price of 46 ETH, with a total market cap of 460,000 ETH – approximately $734 million.
Many of today’s NFT whales participated in the early mint of CryptoPunks. SethS, for instance, holds 668 CryptoPunks V1s.
Surprisingly, data shows that Bored Ape Yacht Club (BAYC) investors have fared worse than those who invested more in CryptoPunks.
Machi Big Brother, who holds 135 BAYCs and no CryptoPunks, is the only top 20 whale who appears to have lost money from his NFT investments. Machi has an estimated profit and loss of around -6,776 ETH (approximately $10 million USD), mostly in unrealised losses, CoinGecko Research states.
Who’s holding and who’s trading?
It isn’t just the luck and tactic of early investing that landed SethS the most valuable portfolio – data shows that he is an active trader, ranking #1 on CoinGecko’s top 15 NFT traders list.
Similarly, pseudonymous Mr.703, who ranks third with a portfolio of 7,839 ETH ($12.83 million), also actively trades. Both whales appear to embrace a trading strategy that strikes a balance between holding and flipping.
The second largest NFT whale however takes a different approach – HODLING.
NFT whale Wilcox, who has a portfolio in excess of $18.55 million, is less of an active trader and is more of a holder. Holding – affectionately known hodling in Web3 – involves holding on to an asset indefinitely until market conditions appear optimal.
And, size doesn’t really matter…
Portfolio size and diversity varies heavily across the top 20 portfolios.
According to CoinGecko Research, 5 of the top 20 NFT whales have “unusually” diverse portfolios, with some holding NFTs from more than 60 different Ethereum collections. NFT Whale ddaavvee, who holds the 12th most valuable portfolio, holds NFTs from more than 202 different collections.
Such investors seem to be following traditional the investment strategy of diversifying their portfolios to mitigate losses and increase opportunities.
However, not all whales have large, diverse portfolios.
7 of the top 20 whales hold NFTs from just 6 to 8 different collections, showing that there’s no one-size-fits-all strategy for NFT investing.
In the world of crypto, it’s not uncommon to see an investor get rich quickly through one lucky sell. One NFT whale for instance made 7,992 ETH, approximately $12.7 million, by flipping one CryptoPunk (CryptoPunk #5822).
The NFT market today
Many of the blue-chip projects that spearheaded the 2021 NFT frenzy have seen sharp price declines this year.
Additionally, data from CoinMarketCap and NFT Scan shows that 95% of NFT collections have lost almost all their value.
In a study conducted by Web3 review and betting website dappGambi, numbers show that a staggering 69,795 of 73,257 collections on Ethereum hold a market cap of zero. This leaves around 23 million holders with assets that are essentially unsellable.
“This daunting reality should serve as a sobering check on the euphoria that has often surrounded the NFT space,” dappGambi researchers said. “Amid stories of digital art pieces selling for millions and overnight success stories, it is easy to overlook the fact that the market is fraught with pitfalls and potential losses.”
The market is currently saturated with more sellers than buyers, with nearly 89% of the NFTs examined remaining unsold.
The market however isn’t dead – it’s simply changing.
As the PFP era comes to a close, a utility and governance era will likely begin to dominate. Adoption has continued to grow, with huge brand names like Adidas, Sotheby’s, Starbucks and many more continuously developing their Web3 offerings.
Other Web3 projects, such as Drunken Monkey Members’ Club, Axie Infinity and others, have also seen continued growth due to their underlying utilities.
Disclaimer: CryptoPlug does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.