The most common way to buy NFTs is to buy them on a marketplace like OpenSea or Rarible. Of course, you can also get NFTs before they are sold on the public market through presale or getting whitelisted. That being said, are there any advantages to buying NFTs through presale or should investors wait to see the NFTs’ trajectory?
The answer depends. You will have to consider your investing strategy and what you are collecting NFTs for. Either way, this article will give you some insights into the process of minting and buying NFTs.
Whitelist, presale, and public sale
The earliest one can have access to an NFT is if you’re a whitelist member of said NFT project. Most projects will have a whitelist consisting of their earliest and most supportive members or investors. Being on the whitelist allows you to buy the NFT at the best price with the highest odds of creating a piece with the rarest attributes.
Once whitelisted members get to mint their NFTs, the projects will often go to the presale phase. A presale list is similar to whitelist, the project owner will set up the requirements and anyone who meets the requirements is able to get on the list. The requirements are not as strict this time of course.
After whitelisting and presale mint, the NFTs can now be minted for public sale, anyone can now mint a new NFT. While still possible, you’re less likely to receive an NFT with good attributes because many of them were already minted during the whitelist and presale round.
Should you get NFTs during whitelist and presale?
Like everything, there are advantages and risks to being among the first to mint brand new NFTs. As we have mentioned, being on the whitelist or presale means you get to buy at the best and lowest price and receive the best potential to have a high return on investment. One investor who purchased a collection of Bored Ape Yacht Club NFTs later sold his collection at Sotheby’s auction for $19 million.
Price is not the only advantage, being an early supporter may net you other added benefits. For example, some NFTs may give token holders entry into the project’s decentralized autonomous organization (DAO), giving them a stake in where the project goes or how the community purse is used. Others may get additional airdrops from affiliate projects, increasing their NFT holdings for being part of the community.
So what’s the catch? Well, having a ‘potential’ for a high return on investment also means there is potential that your investment won’t return any profit and you may even lose money. There is no guarantee that the value of NFTs will go up over time. These tokens’ prices can free fall unannounced after mint. When Pixelmon launched its NFT project as part of a play-to-earn game environment, early adopters could mint their token for 3 ETH. But as of this writing in August 2022, Generation 1 Pixelmon were trading on NFT marketplace OpenSea at a floor price of 0.1899 ETH, which is less than 15 times the original price.
Another thing to mention is that being an early adopter doesn’t necessarily always give you a good price. The floor price can go up significantly from the increased activity from whitelist and presale members trying to be first in line.
Should you get NFTs during a public sale?
What about buying at a marketplace after launch? The answer is the same. There are pros and cons to buying NFTs on marketplaces as well. One upside is the fact that you have some degree of insight into how an NFT is performing on the market, this lets you know the popularity and demand of an NFT and give you a potential advantage on your investment.
There is more information you can gain from buying on marketplaces. When browsing NFTs on major marketplaces, buyers are given analytical insight into the transaction history, price changes over time and how often an individual token changed hands. That information may allow buyers to determine the right time to dive into an NFT as it increases in price, without blindly buying into a project.
And if buying during presale doesn’t guarantee good prices, buying during public sales also doesn’t mean you’ll get bad prices. Timing your purchase when network activity is low can save money on gas fees, giving you the opportunity to get in at a reduced price point compared to minting.
Of course, buying like this means you may miss out if the NFTs get popular quickly. The price of an NFT can increase significantly overnight. For example: When the highly popular Gutter Cat Gang launched, the mint price was 0.07 ETH. As of this writing, the floor price to buy on OpenSea is over 5 ETH – an increase of over 7,100%.
All in all, getting into an NFT early or late should come with careful consideration and research. The decision should come down to your tolerance of risk and overall crypto investment strategy.
Before jumping head first to mint a new NFT, make sure you get as much information as you can about the project. Joining the project’s dedicated Discord server and monitoring social media mentions can help you gauge excitement and anticipation for the launch, ultimately helping you make the best decision for your money.
If you decide to be the early bird investor, research how to get on the whitelist early to potentially avoid paying high gas fees during the initial rush at the public sale. If you are uncertain and see risks after learning about a project, it may be smart to hold off and buy at the market later.