Nothing in this article constitutes or should be taken as financial advice. It is for illustrative and educational purposes only.

In last week’s column, NFTs: Why pay so much for a JPEG?, I touched on the concept of FOMO or hype, and how it leads to price appreciation of an NFT (versus its value). So this week, I want to share with you my experience of FOMO and how it can potentially lead to some irresponsible decisions.

Every now and again a major project comes along that dominates everyone’s attention and people ape in[1] on it. Last week was undoubtedly the week of Moonbirds, as the team behind the project wrapped up their stellar marketing campaign ahead of the mint weekend. I won’t tell you about the project, but if you want to learn more, this episode of Overpriced JPEGs will give you an idea.

I first heard about the project maybe a month ago, when I tuned into a low-key Twitter Space discussing what subsequently turned into one of the most hotly anticipated NFT projects. I really liked how the team was thinking about the long-term value creation for their token holders, which felt different to the “mint now, roadmap later” approach that a lot of NFT projects seem to take.

Over the next couple of weeks, I must have listened to every podcast and Twitter Space (of which there were many), both as part of Moonbirds’ marketing campaign and run by their community members. This team had set out to create the greatest PFP[2] utility[3] project – full stop. I liked what I was hearing… and so did thousands of others. The hype got out of control, with both celebrities and casual punters all wanting a piece of the action. Even the scammers piled in – fake Twitter accounts started popping up trying to scam people, some going as far as buying GoogleAds to promote their fraudulent affiliation with Moonbirds.

Within two weeks, the minting process was changed from a standard Dutch auction[4] to a raffle, to avoid gas wars and bot activity. The raffle would randomly allocate the 8,000 available Moonbirds to the lucky winners, who would then pay a flat 2.5ETH to mint their bird. You had to have 2.5ETH in your wallet just to enter the raffle – that’s almost £6k, which is a lot for a JPEG of an owl, even if it has some cool utility attached to it.

For context, I only own a handful of relatively cheap NFTs because I am cognisant that a lot of projects can and will go to zero before the market matures. But in my mind, Moonbirds were different… I was already emotionally invested, I wanted in!

I will stop here and check my privilege because I realise that even to be in a position to fork out 2.5ETH for anything is already a big deal, and yes, sometimes with NFTs it feels like you live in a parallel universe. I also have a much higher risk tolerance than many (which does not always equal high returns – I am still renting my flat) and I bought my ETH way over a year ago when it was much cheaper. And yes, 2.5ETH is still genuinely a lot of money for me but I also do believe in the future of Web3 wholeheartedly.

Many people were immediately priced out. Yet, over 32k people still registered for the raffle. I had a 1 in 4 chance, but when the winners got announced, my name was not on the list. My first thought was to double down and try to buy this damn owl in the secondary market. But I knew the secondary prices would shoot through the roof. I opened my banking app… the words “home deposit account” glared back at me. In that moment I realised how deep down the FOMO rabbit hole I had fallen – my usually cool head had spun out of control. Put the phone down and back away slowly…

Another thing I realised is that this whole experience was compromising the things I love about Web3 the most – democratisation, accessibility, and the opportunity to support projects whose purpose I care about. What started off, in my eyes, as buying into a project that was creating a blueprint in NFT value chain, had quickly become tainted by hype and market hysteria. Don’t get me wrong – I still like the project (a lot), but for me the price of the token no longer only reflects its utility. The price reflects the sad reality of supply and demand in the Ethereum NFT market.

Hype may be exciting, and a lot of people made a lot of ETH speculating over the last 12 months. But if you cannot make sense of it, then don’t do it – at that point, it stops being an educated guess and becomes a pure gamble.

Maybe one day the moons will align and I will get my bird. But it would have to be at a price that I am comfortable paying, rather than me overstretching myself – which is something I would not do in real life. At the time of writing, the floor price of Moonbirds is hovering around 18ETH, so yeah… I may be waiting a while!

NFTs can be a difficult space to navigate but for me personally, a few important takeaways from this experience were: 

• I like to get to know the project, its community, and the founders (and their track record). 

• If there are digital or physical benefits attached to the token now, I want to understand if they appeal to me and I see value in them.

• If the team is communicating future benefits/utility, I want to understand those too.

• I want to figure out what potential I see for the future of the project beyond what has already been communicated.

• Setting a budget is important, both for primary and secondary markets, otherwise it becomes too easy to get carried away.

And finally, being responsible and knowing when to step away is key, above all else.

Have NFT questions? Tweet us @liyadashkina and @weareAllBright.

Want to learn more about NFTs? Register for AllBright’s Women in Web3: Empowerment and Financial Freedom event.

[1] NFT slang for being bullish or piling into a project

[2] NFT acronym stands for Profile Pic

[3] Utility NFTs are NFTs with values based on the perks and opportunities they give their owners access to

[4] An auction where the price starts high and slowly drops at regular time intervals until it sells out

Disclaimer

AllBright cannot guarantee that all of the information provided in this video or article is accurate. Use the information provided on our website at your own risk. If you wish to make an investment you should seek independent financial advice before doing so, and ensure that you have carried out your own research on the product or company that you are investing in. Any advice provided is not tailored to anyone’s individual situation, as each individual is in a different situation. AllBright does not accept any liability whatsoever for any action taken or losses incurred as a result of the information provided on our site.