Blockchain detective and nonfungible tokens (NFT) analyst OKHotshot” highlighted his selections for 18 of the most “uncomfortable truths” that describe the NFT sector.
In a long 20-part thread to his 45,000 followers on Twitter on August 27, OKHotshot elaborated most of the issues that are currently plaguing the nonfungible token sector, including the irresponsible celebrity endorsements, hacking, and the types of projects that are nearly always destined to fail.
The NFT analyst warned that there are no reliable stable investments in the NFT space and a majority of the investors will lose a lot of money investing in the market. He made his name in the sector as a full-time on-chain analyst who specializes in NFT audits and Discord security operating under a @NFTheder name on Twitter.
Most NFT Investors Will Lose Money
One of the highly sobering “uncomfortable truths” shared by the NFT analyst is that a majority of people will lose lots of their money investing in NFTs. OKHotshot stated that there are no “no reliable stable investments in NFTs” insisting that in case an investor hears the term “blue chip NFT” they need to “run away.”
He also stated that “diamond handing” is not the ideal way to make money or profits. Instead, investors need to be taking profits whenever they can.
“We are NOT all going to make it. Most NFT traders trade at a loss.”
Sometime in the past, reports emerged on a poll that found that while 64.3% of the respondents stated that they acquired NFTs to make money, 58.3% alleged that they have lost money during their NFT journey.
The analyst advised anybody who wants to invest in NFTs has to remain on top of the announcement since “by the time you hear about a new project on Twitter spaces, you are late.”
Furthermore, he warned that liquidity and volume are mostly essential metrics compared to the floor price, and time is quite more valuable than any asset. Hence, planning is important. He explained:
“If there are no buyers you can’t take profits.”
6. You are responsible for your own security. Understand most projects don't audit their code or have Discord security.
— OKHotshot (@NFTherder) August 27, 2022
Most Of The NFT Projects Fail
The NFT analyst also warns anybody interested in getting in early in a specific NFT project as tokens mostly fail to remain above the mint price, adding also that “derivatives rarely outperform the original NFT collections.”
NFT project Pixelmon stirred up lots of controversy in March 2022 after revealing the finalized art for its much-expected project – the quality of which turned out to be far below expectations. The project raised nearly $70 million, with each of these NFTs minted for 3 Ether (ETH).
Nonetheless, the floor price on the OpenSea NFT marketplace has plunged to just 0.26 ETH, worth nearly $370 at the time of publication.
Another NFT project, Phantabear, originally minted for 6.36 ETH and recorded huge trading volumes on OpenSea when it was the first release in January 2022 but has also seen a significant drop in value since then, with the floor price at just 0.32 ETH, or $463 at the time of publication.
A March 2022 study by blockchain analytics company Nansen found that most of the NFT collections either make no money or end up netting less than they cost to develop.
Influencers And Celebrities Clueless
Most of the shared “uncomfortable truths” are scathing of influencers and celebrities. OKHotshot stated that despite what famous influencers may allege or imply via social media posts, noting that “celebrity NFT projects are notoriously bad investments.”
16. Nobody has a real clue what they're doing.
— OKHotshot (@NFTherder) August 27, 2022
He also said that “Web2 marketing is exceedingly ineffective in the NFT market.” Recently, warning letters were posted by a consumer regulator group to almost 20 celebrities for their role in shilling nonfungible tokens.
OKHotshot’s key points revolve around the idea that a majority of NFTs do not have any intrinsic value. The analyst warned that NFT projects without sale terms are not worth anything and that nonfungible token benefits do not travel to downstream purchasers unless specified in these terms.
“NFT projects without sale terms are selling you a token ID with a hyperlink to an off-chain asset. Without terms, nothing is defined. You can’t own a hyperlink so in all likelihood you bought nothing.”
With that in mind, he thinks that the price of NFTs continues to get controlled by hype and market speculation, noting that savvy investors may “use this to your advantage.”
