1/6 - Compared to the narratives we saw in 2H21, recent innovations in crypto have been more “bottoms up” than “top down” in nature, including the further development of L1s, web 3.0 infrastructure, centralized on-ramps, NFTs/metaverse technologies, and developer tooling.
4/6 - Additionally, the conversation surrounding crypto adoption could also heat up in earnest in 2H22, precipitated by the nature of high and sticky inflation worldwide, the growing risks of balance of payment crises and the broader theme of de-dollarization.
5/6 - Overall, the plethora of intersecting macroeconomic factors is putting pressure on nearly all risk assets, although we could soon be entering a consolidation phase that would open up more opportunities for crypto in 2H22.
Demystifying NFTS ...
In the report linked below, we aim to go beyond the basics of NFTs and assess the current ecosystem, where things are headed, and how institutional investors can best approach the space. Some highlights... 🧵🧵🧵 (1/10)
NFT collections with greater liquidity may provide investors with a higher level of downside protection in times of broader market turbulence and/or fluctuating demand for NFTs, relative to collections with lower liquidity. (3/10)
Conversely, attempting to invest in NFT collections which lack a robust track record of secondary sales volume and resultant liquidity often implies an investor’s willingness to move farther out along the risk curve. (4/10)
Minting new projects (primary sales) could be considered the most risky end of that spectrum, while investing in more established “blue chip” NFT collections represents the most risk-averse end of that spectrum. (5/10)
Although there are ~100,000 projects in existence, institutional investors with an average risk appetite could likely eliminate over 95.3% of the NFT collections in existence from consideration based on the historical strength of secondary sales volume alone. (6/10)
The prominent narrative driving NFT purchase volumes over the past eighteen months has largely oscillated between the fundamental attributes of aesthetics, historical significance and proposed utility. (7/10)
In our view, alternative use cases for NFTs haven't received the same level of mainstream attention as PFPs. For the average retail investor, the strategic emphasis has been placed on identifying and minting the next 100x PFP project. (9/10)
From an institutional investor’s perspective, however, investing in the infrastructure of the NFT space and ultimately implementing frameworks like we’ve presented in this report represent far more risk averse strategies. (10/10)