Welcome my friends to the first-ever edition of Nonfungible Alpha
Each week, I’ll drop bite-size, actionable insights for both collectors and artists. The focus is the 1/1 market, up-and-coming artists, and the art of collecting.
Each edition of Nonfungible Alpha will feature an inspiring quote, a recap of market activity, a general insight, a common artist question, a tip for collectors, and a Featured Art currently on auction.
Or something like that. I may tweak this over time.
Alright, LFG
Weekly Quote
The master has failed more times than the beginner has even tried.
-Stephen McCranie
📈 Market Pulse
July SuperRare volume is sitting at $3.2M, already surpassing June’s $2.8M. This speaks less to July and more to how sloow June was. July is still on pace to fall short of all but two months since January 2021.
However, monthly number of artworks sold on SuperRare is on pace to hit just over 1k in July, the highest mark since October 2021. This trend, alongside relatively flat total volume, suggests a stronger bid for lower-profile artists.
💡 Weekly Insight
A question I’ve asked myself lately: why are nonfungibles outperforming fungibles in the bear market? Especially 1/1s from promising up-and-coming artists.
Virtually all fungible tokens fell significantly in the past few months. Total NFT volume is down, but numerous artists have hit new all-time high sales.
Why is this? A few possible reasons:
Strong-handed Hodlers
The archetypal 1/1 collector plays a long game, often planning to hold for years, sometimes forever. They have LT conviction in the artist and may even be friends with them.
They may feel attached to the works they own on an aesthetic and even identity level. If you own a fungible token, there are thousands if not millions of people who own the exact same thing. If you own a 1/1, you are the only person in the world who owns it. You may derive joy and pride from that ownership.Tighter Supply
Most fungibles suffer inflating supplies and sell pressure due to liquidity mining, VC unlocks, or block rewards. In contrast, successful artists are intentional about their "1/1 supply", only minting their best work and at a reasonable pace.
Illiquidity
1/1s from in-demand artists fetch a high bid, but it can take time to find the most willing buyer. If a collector is in a crunch for cash, it makes sense to turn first to more liquid fungibles.
FOMO
If you think a fungible token is cheap, you might DCA in or wait to buy on market strength (or capitulation). But you can't DCA into a great artist or be guaranteed a chance to buy later. Greater scarcity means greater FOMO.
UP ONLY
Great artists are “UP ONLY.” I’m not talking about price here. Instead, how they continually push their work forward, build their collector community, and take things to the next level.
Compare this with fungible token projects. Even if a project has real cashflows, they tend to be reflexive and plummet in a bear, pushing down valuations. If they don't have cashflows, they only have narrative which tends to get hit even harder than cashflows.
Any other factors I’m missing or different perspectives? Feel free to comment on this post or DM me on Twitter, I’d love to hear what you think.
👀 Tip For Collectors
Something I’ve found useful you may consider:
Create a Twitter list with all the artists in your collection (you can see mine here).
If there’s a subset of artists you want to follow more closely, you can create a private list too that only you can see.
Why do this?
-keep up to date on all the artists you collect in one place
-give them an easy way to discover/follow each other
-bring more attention to their work and your collection (if others follow your list)
-discover new artists via retweets/comments from artists in your collection
-develop better pattern recognition for what sorts of artists take off in this space (and what social media practices work best for artists)
🎨 Artist Question
Here I respond to a common question from artists. I offer my take from a collector’s vantage point and from observing what works well. Ultimately, it is up to each artist to decide what to do.
“How often should I mint?”
In my view, dynamic minting almost always works better than a fixed cadence when it comes to 1/1s.
A fixed cadence is something like once per week or month. A dynamic cadence means responding to what the market is telling you, minting at a faster rate when there’s momentum and your work is selling, or slowing down when your work is not selling (or you don’t have work you feel great about to mint).
So if you hit a wave of momentum, I say ride it. But also pay extra attention at that point to make sure your work is going into the right hands. Naturally, an artist with a lot of momentum will attract shorter-term “flippers” too. Nothing wrong with that, but if you want to build out a sustainable market for your work, I think the focus should be on LT-minded collectors.
I share more specific guidance here on criteria to calibrate minting cadence.
🔥 Weekly Featured Art
TODAY WAS A GOOD DAY, by schauermann
Available on SuperRare
Enjoyed this 👑. Another way to frame DCAing for art is through editions. This is doing very well in the photography community, as it gives collectors an opportunity into the ecosystem at a much lower cost. Editions strengthen the value of the artists portfolio, and, especially if the artist continues to tell their story, those editions will naturally rise in value. Furthermore, artists are continually finding new ways to reward holders of all their art.