Lorepunk’s Guide to Taking Your *%$#/! Profits like a [%{!#+ Adult
A strategy for NFT collectors to stack ETH by embracing selling and adopting a multiples approach.
We're back with another insightful article by the talented Lorepunk. This post offers valuable advice for those of us looking to navigate the hype and emotion of the NFT space while building our financial portfolios. Dive into this must-read article and discover how to adopt a mindset of "paper hands, diamond wrists" to achieve success in the NFT marketplace. - Jordan
I absolutely adore web3. This space is so, so fun! We’re building communities and creating amazing collaborative projects together, challenging the definition of “art” everywhere we go.
But the thing is, one of the things that many of us joined the space to do is to stack ETH, i.e., make money. And it turns out that many of us are phenomenally bad at that.
We get so genuinely enthused about the communities we’re joining, the relationships we build and all of the fun and delight of creativity that we fritter away all of our hard-won crypto, and “reinvest” or diamond-hand hold into financial oblivion.
Let me be clear here. This “we” that I’m talking about? It’s me. I cannot tell you how many times I’ve scrolled through my inventory thinking, “hm, I cannot sell that! My frens will be MAD AT ME.”
It took some really serious conversations with myself to realise that what I needed was a full reboot of my approach to buying and selling NFTs.
In 2021 and for most of 2022, I was in a mode of chasing the hype for projects, spending loads of money and holding all the way down to mint price or below. I was deeply mired in the sunk cost fallacy, and believed that just because a project was promising a roadmap, utility, merchandising partnerships or the potential of crossover properties like a game or show, that I should believe them.
When NFT sales volume began to increase again in the beginning of 2023, I took the opportunity for a fresh start. I liquidated many of the projects I had been holding for over a year—interestingly, what helped most here was simply the advent of Blur, not because of its reward system or because it is necessarily a good thing for the NFT marketplace, but simply because it has a different look and feel to OpenSea. That difference made it easy to look at my collection afresh, detaching myself from what I had spent and considering only what I could get now if I sold.
So, when volume picked up I sold lots of things, and made a little pot of money for degenning with. I made a series of commitments to myself, which I am now delighted to share with you, the ETH-stacking public. Not a word of this is, of course, financial advice.
Buying a thing? Buy at least four of it.
What the heck? you might ask. How is that supposed to help me stack ETH?
Well, it’s simple. If your brain is anything like mine (and I hope for your sake that it is NOT), you will get into analysis paralysis mode when your bags are pumping. Is this the top? Is it going to pump higher? Is this the next Bored Ape?
My fren, it is almost certainly not the next Bored Ape. And nobody knows if this is the top. If you have at least four of something to start out with, then you can sell them at local tops. You cannot reliably time the absolute top. So, you might as well sell at a local top, when your investment has already grown by 300 percent or more.
This also works when prices are sliding DOWNWARD and you’re trying to stanch the horrifying haemorrhage of ETH caused by your bad decision and recover at least some of your outlay. When you’ve got multiples of a project, you can sell and hold at the same time!
Corollaries of this rule apply. If the most effective utility of an NFT is to hold (or burn) multiple copies, if you have liquidity you can safely risk, consider purchasing a factor of that number. For example, if you are lucky enough to be minting something with a good chance of going up in value, and there’s an indication of maximal utility in holding seven of them? Mint fourteen or twenty-one.
This strategy will help you unclench your 2021-era diamond hands. But for it to work you’ll have to actually sell stuff.
The motto for this? Like many of the cultural phenomena of the NFT space, it’s a phrase reportedly originating from Reddit’s wallstreetbets:
Paper hands, diamond wrists.
What does this mean?
It means that you regularly SELL, and your adherence to strategy is as adamant as diamond.
Emotionally, selling sucks HARD sometimes. I minted Proceed with Caution, then I bought a bunch more on the way up. Then they started pumping hard one day, and I was jittery and excitable that afternoon. It really confused my husband, who had become used to steady bear-market lorepunk. I was full of excitement and anxiety all at once, but then I was able to tune into my feelings and intentions. I told my very patient other half that we had to go home so I could sell some stuff.
When I was plugging in my ledger and getting ready to sell, I did NOT want to. It was going up! Everyone was yammering about open editions being the new meta! I was literally yelling at myself to shut up and follow the program. I had to cheer myself on, coach myself into following the strategy! And I did. I sold my full set, just before burning stopped. I kept one Arctic.
There it was, thousands of bucks in ETH. Oh, hell, did that feel good. Commence shit-eating grin time.
I sat with the feeling for a minute. “Put a tack in this,” I said to myself. “The dopamine hit from selling is even better than the one I had from holding!”
That brings me to another point: reward yourself for selling! I went out and sampled some delicious beers with my best friend. Train your brain to feel good about taking profits; the NFT community as a whole, and specific project communities, are engineered to encourage holding, by promoting a feeling of belonging and a fear of missing out. Friends, in meatspace or online, who cheer your profit-taking are essential.
Another thing you can do is associate taking profits with a feeling of security in yourself. Put most of that volatile ETH into nice, boring stablecoins, and off-ramp some to pay expenses, build fiat savings, and set-aside for tax.
If you’ve followed the advice I began with in this article, you’ll still have some of that NFT left for selling the next pico-top, AND some (maybe even just one or two!) for holding, so you can stay a part of the communities that mean a lot to you.
“But lorepunk,” you say. “I don’t have a bazillion ETH hanging around for buying so many of anything!”
That leads into my next suggestion: stop buying expensive overly hyped things that you care so much about, and spend that allocation on a multiples strategy for high-conviction buys.
Well, maybe buy ONE or TWO tokens in those mega-hyped, curated-allowlist, irritatingly unavoidable .333 massive projects, if you’re truly that committed to the community and the team. Maybe you’ll luck out and get a y00ts instead of a Pixelmon Kevin. Maybe you’ll hit the next Bored Apes and send me an “I told you so.” (note: I prefer my “I told you so”s in solid silver!)
If you want to do this it’s fine, but you should separate out your COLLECTING budget from your ETH-stacking fund.
Whenever you take profits, set some aside for spending on projects that you plan to buy multiple tokens of, flipping at least some of them for further profit. This money is for earning money with. It’s not for people-pleasing, being cool, supporting your friends, or demonstrating how smart you are to Crypto Twitter.
Get into some reliable alpha channels—projects with good, long term communities are often the place where these channels coalesce. Then, absorb and track what’s going on in there, over a period of weeks and months. At a certain point you’ll begin to feel confident enough to start making some plays alongside the community.
For these plays, it matters not whether the art is ugly, the founders piss you off, or anything else. You’re here to stack ETH.
Orientating your monkey-brain towards aligning with the community of traders in your alpha group—rather than its natural inclination of death-gripping that rapidly pumping or depreciating asset in your wallet that you should sell—will help you develop the muscle memory, and the mental calluses, to achieve the goal of paper hands, diamond wrists. Buying ten visually forgettable .01 open editions that might 4x in a day, and then selling eight of them that day, is the kind of thing you want to be going for.
An important codicil to this entire strategy is that it makes sense no matter whether you’re a tiny minnow or a whale. This strategy does not care that I have a Punk or a stack of stables.
In fact, when I was selling first one, then another of my four Checks when they were in their pre-game upswing-a-thon, I was shouting at myself, “UNCLENCH, you have a Punk and a stack of stables! You don’t need to hold on to every single check! Provide for your Q1 expenses!”
Everyone makes money a little bit at a time, in slow, grindingly boring, repetitive plays, without fear, favour or mercy. If you can’t do it at .01, do it at .001. If you can’t buy ten, buy four. Keep doing it and doing it. It will become a chore, like washing dishes or leg day. Bribe yourself, just like you do for leg day. The human primate is a simple animal.
And if you screw up, don’t kick yourself or curl up into a copium-fuelled ball and suck your thumb. If you mistimed something and those JPEGs are perma-circling down the Drain of Worthlessness, use them for tax-loss harvesting. There are even websites that will help you do this.
This strategy has vastly lowered my anxiety in the space, opening up more avenues for creativity, collaboration and enjoyment! It’s not a panacea—and it’s definitely at the level of simplicity that is accessible to me, who is a writer, not a quantitative analyst. Many people use trading bots, clever mathematical solutions and years of experience in trading and crypto to leave this strategy in the dust, but for most of us—particularly artists and creatives who are relatively new to trading—it’s a start. I’d love to hear how you get on, and I wish you a prosperous journey!
By Margaret Corvid
About Margaret: Margaret Corvid (lorepunk.eth) is a writer and poet based in the U.K.
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Disclaimer: Not financial or tax advice. This newsletter is strictly educational and is not intended to be investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Do your own research.
...way to go...thank you very much! Juergen