With the huge sums of money that poured in to the NFT space, the term ‘NFT Flipping’ went mainstream, and an influx of NFT buyers simply looking to make a quick profit increased dramatically.
These NFT flippers would buy an NFT either on a whitelist or post reveal and sell quickly for a higher price.
Some made fortunes flipping NFTs. Sometimes even enough to buy a car, a house or even retire on.
Since the cryptocurrency and NFT crash, and the bear market settled in, many NFT flippers left the industry in search of other opportunities.
With the number of competing NFT flippers reduced, and NFT launches still happening every day, it’s often asked whether NFT flipping is still worth it.
If NFT buyers and sellers are still within the market, it stands to reason opportunities must still be there to take advantage of.
In this article we will look at how important the current actual sales trends are, as well as the NFT strategies used to make a good return.
This will show whether NFT flipping is still possible and whether its worth it based on the time and money that would need to be invested.
What is NFT Flipping
NFT flipping is where someone will purchase an NFT and then look to sell that NFT for a profit in a short period of time. Buying low and selling high is referred to as flipping. NFT flippers look for patterns in sales and carry out due diligence, in search of a good ROI potential.
So, how does this work?
An example of this is when someone has a whitelist spot, which could allow them to not only mint (buy) early but also mint for a discount.
This discount could be the profit margin for the NFT flipper if they decided to sell just before the official mint at the mint price, or slightly under it.
According to Jesse Coghlan at CoinTelegraph ‘Around 64% of people in a recent survey said their top reason for buying an NFT was to “make money” “.
More than half of all 1.5million NFT buyers did so not for the love of NFTs, or the artwork or to support the project behind the collection, instead they did it simply to make money.
It’s understandable that as the bear market set in, cryptocurrencies fell and profits were not in abundance like they were, and as a result these NFT flippers left the market in search of flips in other industries.
Best Methods for Flipping NFTs
Although we have briefly looked at flipping an NFT through a whitelist spot, it isn’t the only strategy being used.
Here are some of the most popular ways to flip NFTs in the short term for profit.
Rarity sniping involves a rather sneaky but perfectly fair strategy of finding rare NFTs within seconds of a collection’s reveal that are incredibly underpriced.
The majority of NFT collections have a rarity score for each of their NFTs,
Each NFT is ranked in order based on how rare the accessories, features, or special characteristics it has.
Surprisingly several NFTs are usually up for sale at or around the floor price just before the collection reveals.
The reveal means each holder can see how rare their NFT is, which is represented by a number between 1 and the total number of NFTs in the collection (i.e., 10,000).
The lower the number, the rarer and more valuable the NFT will be.
Rarity sniping involves checking the rarity ranking of those NFTs already up for sale before the rarity was announced, and then buying those rare NFTs at the low price.
The NFT holder may not realize they own a rare NFT or may be busy when the reveal happens.
Smart NFT buyers seek out those rare NFT opportunities and buy those NFTs listed for sale at undervalued prices – which is an automated process – before the NFT owner realizes what they have and removes it from sale or increases the price.
Rarity sniping is considered one of the best ways to flip NFTs, although an NFT tool is usually required as checking manually becomes an incredibly time-consuming exercise and those who are using the tools will get there first.
The undervalued traits flipping strategy is similar to rarity sniping, but the timing of both strategies is very different.
Rarity sniping happens just after a collection reveals. A short window may present itself in order to grab some bargains.
Undervalued trait flipping can occur at any time after the collection has revealed but usually after some time has passed.
This strategy relies on analyzing sales data and looking for NFTs within the collection with specific traits that are in demand.
This can be linked to the rarity of the NFT, but not always. The character within the NFT may have a particular accessory that is sought after, even if the NFT itself isn’t particularly rare.
This type of data can only be analyzed once many sales have been made.
Undervalued trait NFT flippers are meticulous when it comes to sales analysis. They spend hours studying all sales and search for trait pattens.
These flippers then seek out NFTs with these traits that are listed for sale and can use their analysis to see whether it’s undervalued or not.
Rarity analysis is much easier though, as each NFT is awarded a publicly visible rarity score. Therefore, has a much higher number of people using this strategy as it’s the easiest one to use.
Identifying the in-demand traits requires time to do the sales analysis. There are far fewer NFT buyers using this strategy than rarity sniping, not because rarity sniping is necessarily better but because it’s easier.
This can give anyone looking to use this strategy a competitive edge.
We covered this strategy briefly before but there are NFT flippers who search Twitter and Discord regularly in a bid to win whitelist spots.
Whitelists are limited places given away by NFT creators which grants the whitelist holder the ability to mint earlier than anyone else, which often guarantees a mint opportunity, and also it can come with the benefit of being able to buy the NFT at a cheaper price than everyone else.
NFT creators do this as part of their marketing plan to drive interest and hype.
Being able to buy the NFT cheaper than anyone else provides an opportunity, especially if the NFTs are sought after.
It would be like being granted access to the presale of a high demand concert where it’s expected to sell out quickly, and not everyone who wants a ticket will get one.
This allows whitelist holders to quickly flip their NFTs for a profit.
It can take hours and hours of searching and grinding on Twitter or Discord to enter competitions for whitelist spots, but many NFT flippers made regular good returns using this strategy.
The Whale Watching NFT flipping strategy is often the most overlooked but can end up being the most profitable.
A whale is an NFT holder who holds either vast numbers of valuable NFTs or those holding particularly high value NFTs in blue chip collections such as Bored Ape Yacht Club or Crypto Punks.
These whales know what they are doing.
They often know people on the inside of some high-profile collections, and also have the funds to pay for the most expensive tools and join the most expensive and elite Alpha groups.
As the nature of the blockchain is transparency it’s possible to monitor and watch the buying activity of these whales.
Seeing a number of whales being bullish early in an NFT collection, even when demand appears low, may be a sign that something big is about to happen.
It isn’t always an exact science, and whales also lose money, but they are usually part of uber-secretive groups that can make or break a collection overnight.
Watching their activity means you can take advantage of the tools they are using, the people they know and the knowledge of the alpha communities they are part of without having the financial outlay.
Using NFT Tools for Flip Research
Trying to implement any of the strategies above without an NFT tool can be incredibly time consuming.
This is except for whitelist grinding which can’t be done using a tool.
Without an NFT tool finding the rare, undervalued NFTs not only will take someone considerably longer, but also those people who have the NFT tools will find them and buy them first.
There are a number of NFT tools on the market, and I have tried a large number of these tools including Blockprobe, Icy Tools and NFTInit.
All work on a similar concept of giving you access to real time sales data, and then highlight potentially undervalued NFTs based on trait sales, current trends and rarity reveals – all as they happen.
The cost of these tools varies, and access to the tool is usually by way of an NFT purchase.
Some tools even have different tiers where top tiers with access to exclusive features are only reached by owning the most expensive NFTs in the collection.
NFT tools are an integral part of a successful NFT flipping strategy.
Current NFT Price and Trends
To understand whether NFT flipping is still worth it we need to look at the current sales trends.
The trend in the floor price of new NFT launches are just one way to assess the current volatility in the market.
When the market is doing well there will of a greater opportunity to flip for a profit. A poorly performing NFT market will lead to less opportunity and a greater chance of being left with NFTs worth less than the amount paid for them.
In 2022 the NFT market has been hit very hard. Large blue-chip collections are down by as much as 75%.
Even A list celebrity launches such as Reese Witherspoon’s World of Women collection have taken an incredible hit, and the floor price is down considerably.
On the other hand, although NFTs have had the lowest number of purchases in June 2022 than the 12 months beforehand, they are still being minted, bought, and sold.
Millions of dollars continue to be spent in the NFT space.
It’s less than it was, but the market and ecosystem is still just about staying afloat.
Those new in to NFT flipping may want to wait for the market to pick up again, and NFT sales to start resembling that of late 2021 and early 2022.
Flipping potential is currently there but finding them is harder.
How Much Money can be Made Flipping NFTs
We researched heavily in this area.
NFT flipping was the in-trend early in 2022, so we set our sights on understanding the approach, the strategies and how much could really be made flipping NFTs.
We analyzed 56 NFT flipping case studies and what we found was the amount of money that could be made through NFT flipping was relative to the amount invested.
Therefore, the more money spent on the NFT the higher the return potential was.
The media portrays NFTs as ‘get rich quick schemes’ and where people can invest one dollar and make a million dollars overnight.
This isn’t the case and is a far cry from reality.
On average, in our case study analysis, NFT flippers made a 22% return on the amount spent on the NFT.
Spending 0.4 ETH on an NFT, on average, would have seen a return of 0.088 ETH.
What this analysis doesn’t show is the research and due diligence the NFT flipper does on deciding which NFT to buy.
That 22% average return would have been a lot less if the NFTs had been chosen at random.
We’d estimate the average return, in the current climate would be closer to 10% to 12%, but the due diligence required to get there would have to be more in depth and thorough.
The Problem with NFT Flipping
Although there are number of positives to NFT flipping, there are of course downsides.
Aside from the challenge of trying to work out which NFTs will increase in value rather than decrease, the biggest challenge is Ethereum gas fees.
Gas fees are the network and blockchain charges to validate a transaction.
Minting, buying, and selling NFTs are all transactions on the blockchain.
Polygon MATIC and Solana have very small immaterial gas fees, but the charges on the Ethereum blockchain have been notoriously high.
Towards the end of 2021 this stood at an average of $118 per transaction, by mid-2022 this reduced to an average of $25.
Even a $25 gas fee can eat heavily in to any NFT flipping profits, especially when returns are forecast to be between 10%-12% right now.
Ethereum is going through a Merge, which as part of the process changes the validation method from Proof of Work to Proof of Stake.
This change will mean a reduced environmental impact, as there will be no miners with energy draining servers validating transactions, plus a massively increased number of possible transactions per second.
The low number of transactions per second on the Ethereum blockchain is a direct correlation to the high gas fees.
This change may see the end of high gas fees taking away much of the profit margin on NFT flipping.
Is Flipping NFTs Worth It?
NFT flipping is still worth it with the right NFT tools, the right due diligence, and enough money to invest. The Ethereum Merge to Proof of Stake from Proof of Work will reduce charges and make NFT flipping even more profitable.
The NFT industry is still highly volatile and high risk.
The best approach to NFT flipping is researching first. Watching and observing the market, the collections and the whales buying and selling habits.
Understanding how they act, what they buy and when they sell, will give insights on good strategies to follow – like ones we have already covered in this article.
Create a strategy that is right for you and follow it meticulously!