Profit Taking & Short Term Trading Principles for Crypto Games

An Approach To Trading In The Crypto Gaming Sector

Introduction

In this crypto gaming journey, there are multiple strategies that can lead you to both your short term and long term goals. For some, a short term approach is their preferred method of investing. We’re more of a long term investment type of team. However, we still find some short term strategies to be quite viable and appropriate depending on the circumstances. Truthfully, some of these projects deserve to be treated as short term plays anyway. 

You don’t want to be caught holding the bag when the news drops that a project was a rug pull all along. When we say short term investing, we’re usually talking about a period of approximately 6 months - 12 months. Long term investing is between 1 year - 5 years. So, judging by these timelines, we’re going to discuss some of the strategies we would consider if we were to take a short term approach to the market. The strategies discussed in this deep dive is our approach to determining when it may be a wise time to enter the market, or to take some profits.

Buy The Development, Sell The Release

• “Buy the rumor, sell the news,” is a popular phrase that is often repeated in the world of investing/ trading. This has been an OG short term trading strategy for quite a while now.

• This same strategy applies to crypto gaming. During the initial announcement and development phase, it’s common for a project to gain a lot of hype and momentum in anticipation of what’s to come.

• One of the best and most recent examples that fits this strategy perfectly is Raid Party. The project was able to gain approx 5,000 ETH from a Dutch Auction that led to massive FOMO.  The average mint price was 5 ETH.

NFTier @tier_nf

Per prediction, the genesis auction sold out at 5.05Eth, which means heroes will be 1.6Eth and fighters 0.85Eth. The distribution will indeed be skewed to larger wallets @raidparty @notchefbob

NFTier @tier_nf

@raidparty I, more than anyone, am super excited for the release today! However, hearing from many (interested) individuals with smaller wallets, the pricing structure will not achieve the distribution intended.

• The top 10 bids were massive.

RaidParty @raidparty

Who was in the top 10? 👀

• Those that bought into the auction were up for a short while.

Otto Suwen @OttoSuwenNFT

Raid Party (Genesis Heroes) are already up 2x from auction. That's actually insane.

• However, no more than two days after the auction, the floor dropped to around 2 ETH from a price of approx 6 ETH. After the reveal, the price dropped even lower – around 1.7 ETH.

Source: OpenSea

• This is a case where selling right before the release would have saved someone a world of heartache.

pikanxiety.eth @pikanxiety

Top bidders for Raid Party are down astronomically rn. 45+ eth for 2 gen heroes + 2 normal heroes + 6 fighters. You could have paid 11 eth for 2 gen heroes (5 eth auction + 6 eth secondary). Y'all really paid 34 eth for 2 normal heroes and 6 fighters. Fomo really is a bitch.

Follow The Hype Cycles

• Hype cycles are defined as the five phases that represent the maturity, adoption, and social application of specific technologies. The five phases are:

Source: Wikipedia

• However, when people talk about hype cycles within the crypto industry, they are referring to the different phases in which a project gains the most hype. Though traditional tech and crypto industries both have their differentiating factors, the chart below applies to both.

Source: Wikipedia

• Following hype cycles is definitely a short term strategy that you must partake in at your own risk. Judging from the chart above, the best time to exercise any exits is around the time when mass media hype begins – on the way to the peak.

• It would be disingenuous to not point out that predicting hype cycles can be very risky. Not only are they tough to follow, people also fall into the trap of not being able to press the Sell button when it’s time.

medved @mattmedved

Buying into hype cycles is playing with fire.

• This often leads to undisciplined investors becoming the victims of rug pulls – which unfortunately have become quite common in the NFT and crypto gaming space.

amixtureofatoms @amixtureofatoms

Bruhhhh can we stop hyping up dumbass cashgrab projects? Literally the last 2-3 hype cycles have been massive rugs or cashgrabs. The mentality of the majority of people in the space fucking amazes me, are no lessons being learned? 🙃

• Following hype cycles can also be super risky because the timeline can be extremely short. Therefore, you must be in tune with everything that is happening with the project as well as the overall sentiment within the community.

DCinvestor.eth @iamDCinvestor

@ASvanevik it's even worse with what i expect will be weekly NFT hype (each on ~1 month cycles), which i believe will persist in a bear

DCinvestor.eth @iamDCinvestor

new NFTs have a *massive* incentive to capture even waning attention in a bearish period we've seen this w/ fungible tokens to an extent, but most would avoid launching in a bear. need use to drive durable outcomes NFTs only need ephemeral attention to make their creators rich

• However, when used correctly, hype cycles can be a great tool for separating hype from truly innovative projects. This ultimately works in your favor, because once you become a master at identifying hype cycles, you can make your investment decisions accordingly.

• A perfect example of the Gartner hype cycle playing out in NFTs is the mass media coverage of BAYC & celebrity buyers entering NFTs, denoting the top of the recent NFT cycle. A great example is Justin Bieber buying a BAYC NFT at the top price 

Hailey Lennon @HaileyLennonBTC

Justin Bieber purchased a Bored Ape Yacht Club NFT for $1.29 million, paying a reported 300 percent more than its valued market price. Justin Bieber buys Bored Ape NFT for $1.3M

pagesix.comJustin Bieber buys Bored Ape NFT for $1.29MThe “Peaches” singer reportedly purchased the NFT for $1.29 million, 300 percent more than its valued market price.

• This guy read the writing on the wall perfectly.

Karl Havoc @FakeKarlHavoc

@scottybialczak @Grove_x3 @NFTsAnonymous @BoredApeYC I used to own 4 lol sold my last 1 when Bieber bought in lol

Watch Out For Project Expansions

• Project expansions usually deliver bullish outcomes. Most of these expansions happen in the form of another NFT release.

• We’ve seen this with projects like:

  • Bored Ape Yacht Club: BAYC has released a number of expansions that has helped increase the overall value of the project. One of the most notable releases is the Mutant Serum that was airdropped to all BAYC holders.

  • Cool Cats: At the end of January, they released Cool Pets, which created new excitement within the community.

  • Doodles: They recently released Space Doodles. Instead of releasing a new collection, they added new features to the original collection.

0x0wl @unnamed_owl

some thoughts on the @doodles space drop, and why I think this is the greatest innovation the space has since since @BoredApeYC dropped serum. 🧪 👇🏻🧵

• It is to be noted that this strategy works best with projects that have already had a successful launch and have been able to maintain a thriving community. If you notice, all of the projects mentioned above are regarded as “blue chips” within the NFT space. The play here is brand loyalty and reputation.

• If project expansions have worked for regular NFT PFP projects, there is no doubt that this will be a home run for certain crypto games.

• We have seen proof of this in the past in conventional gaming with established games that have active player bases.  Each time there is an expansion or content release, the game will experience an influx of users, both returning & new users.  Path of Exile, a popular ARPG, is a great example.

PCGaming Love @pcgaming_love

With the release of their new expansion, "Betrayal," aRPG and Diablo competitor Path Of Exile breaks their all time online user record. bit.ly/2QFGifk #PC #Gaming

Path of Exile @pathofexile

We just broke our all-time concurrency record for players online (and still climbing!)

• The in game economies reflect the sentiments of hype as well.  This is important to crypto because these same principles are present in NFT projects & will likely make their way into our favorite crypto games.

Conclusion

• Short term investment strategies are ideal for those that are looking for ways to increase their long term investment stacks. However, it needs to be stated that only those with a certain risk appetite and experience level should engage in riskier strategies. A long term outlook is usually the safest approach to the market.

• Whether looking for a short term strategy to build your stack, or a profit taking strategy for the NFT, crypto, & crypto gaming projects you love, these are a few tips that will hopefully serve as a solid roadmap. Sell when hype is high, while always keeping large content releases in mind.  As always a little bit more research goes a long way in the journey of a successful investor.