The Bear Market

3 stages of a NFTfi bear market. growth can wait, survival cannot

Stage 1: The Unwind

The excitement (and greed) from the bull market still exists. Mini-narratives pop up for weeks at a time. Assets still have floors. Valuations are cut but companies don't make the tough decisions (kill products, layoffs). Things seem alright. Stage 1 doesn't feel like a bear market. It feels like prices have pulled back to "realistic" valuations. Investors continue allocating, builders keep building... In general, life is good. Only the weak hands sell.

Stage 2: Capitulation

This is where it gets ugly. Narratives die. Prices fell 90%... then another 90%. Layoffs across the board. Mainstream media and cynics rise up in Stage 2. They laugh and shout "I told you!". Luna sent us into Stage 2. In Stage 2, diamond hands become forced sellers. They sell not because they want to, but because they have to. Celsius doesn't want to sell – they might have to sell. There will be more funds, companies, and individuals like Celsius. In Stage 2, any bounce will be immediately sold into. The dead cat bounce. Companies that need high token prices will be crushed. Founders that buy their own tokens to sustain their projects… they'll also get crushed. The lower prices go, the louder the bears get. The louder the bears, the lower the price goes. This creates a vicious cycle. In Stage 2, prices crash violently. Excitement is replaced by anger.

Stage 3: Exhaustion

After max pain comes max exhaustion. There are no bounces. There are no narratives. Prices consolidate sideways or slowly move down. It's boring. At the bottom, anger is replaced by silence. During Stage 3, you'll want to walk away. Regulators will kick us while we're down. Your favorite Twitter degens will go quiet. Web2 investors will quietly stop allocating. Talented builders will leave. Companies will shut down. You'll question every assumption you had. Stage 3 is the toughest to survive. If you're a company, do whatever it takes to get through. If you're a builder, stay interested. Find other builders. Build with them. If you're an investor, develop your own thesis. Take bets on people you believe in. Don't lose sight of the big picture. We're building an open, permissionless world. It will take decades, not years. Close the computer, zoom out, and go for a walk.

Just don't give up (credit to YANO!) Long-term, bear markets are good. It tests individuals, companies, and industries. Those that make it are disciplined in a way that is lasting. Communities that form during these times hit a different level of strength and resilience, and that's gonna be us. Coz you can bet your arse that LTL Art Collective is not going anywhere. We've been through this before, multiple times, and we'll do it again. Pay attention to the nft projects that are still building and growing their communities. The teams that survive this bear market will be unbreakable.

The class of '17 screamed the same things as the class of '13. If you are in the class of 20-21 for this run, welcome. Stay around. Human nature doesn't change, bear and bull cycles ALWAYS occur.

actually🐻⛓ may fix this tbh but still, "If bears don’t hibernate in the winter they die. Bears who kept trying to find food in winter probably died over time. Perhaps these bears were so addicted to motion, they kept confusing it for progress. Surviving bears learned to get fat in the summer and sleep in the winter." 👑 Asfi. CT added an extra layer of insight: "Bears actual utilize torpor and not true hibernation. So for the analogy, it means you shouldn't check out completely in winter but just do all one can to reduce energy use." PopStar 🔥

Update: The 3AC drama, and how long can this last, how much more downside in the next 33m?

The problem of overpromising and underdelivering is quite simple. Many projects create grand roadmaps and claim that they will revolutionize the world, such as with P2E games, fashion brands, or tech innovations. However, the reality is that there are billions of these ideas out there, but only 1% of them will actually succeed.

When a project secures funding from investors, its primary focus is on generating returns for the investors rather than NFT holders. This can lead to charges for various services, conferences, and increases in the supply of the NFT. It's important not to become overly attached to your NFTs and to be aware of the risks involved. Note that very few projects maintain a committed community.

Many projects made the mistake of assuming that their 2021 royalty revenues would continue at the same rate, and based their growth plans on this. They hired too many people and created unsustainable business plans, only to find that their revenues dropped by 90% in 2022 and the outlook for royalties remained uncertain.

Furthermore, many of these projects made the mistake of assuming that ETH would remain stable or increase in value and failed to sell enough ETH to account for their tax liabilities. When ETH unexpectedly plummeted in value, it resulted in a significant loss of funds for these projects, destroying their treasuries and dashing their hopes for the future.

This kind of negligence can be devastating for projects and their investors and highlights the importance of prudent financial planning and risk management.

NFT HOLDERS EXPECT TOO MUCH

Many NFT projects are like start-ups and have a high probability of failing. It's important to recognize that the chances of any one project succeeding are low. It's essential to understand that investing in NFTs is not as straightforward as it may seem. VC firms spend weeks analyzing data and speaking with founders before investing. Even with extensive research, some VC firms have made bad decisions investing in NFT projects at high valuations. Therefore, it's essential not to be too hard on yourself and manage your expectations accordingly.

To summarise, we are where we are now because of a combination of two things:

  1. Projects overpromising and under delivering

  2. Collectors setting their expectations too high

It really is that simple...or is it?

Buying NFTs can be straightforward: only purchase art you like, or simply buy back the founders or artists. That way you don't care if it tanks. When you speculate on a return, remind yourself that it's a gamble and never convince yourself that it's going to be the next big thing. That way, you can still enjoy the excitement and not get too upset if things don't work out.

In the end, NFTs are meant to be enjoyable, so go out and have fun!

The Rise and Fall of Token X: Lessons in Momentum and Managing Expectations

In the fast-paced world of cryptocurrency, sentiment can make or break a project. At its most extreme and short-term form, sentiment manifests as Momentum - a powerful force that can propel a project to new heights or send it crashing down. This was the case for Token X, a shooting star of the last bear market that was almost immune to the downtrend that affected most other DeFi protocols.

For a time, Token X was a Top 50 DeFi protocol and seemed unstoppable. But just as quickly as it rose, it fell. Within a few months, the price plummeted by more than 90%, and Token X was left struggling to regain its footing. What happened? Simply put, Momentum - the same force that had propelled Token X to success - had reversed.

Momentum is a double-edged sword in the cryptocurrency space. On the one hand, it can create a powerful sense of FOMO and anticipation, driving prices higher and higher. But on the other hand, it can quickly reverse if key catalysts and expectations are not met. This was the case for Token X, which lost its Momentum when holders no longer had anything to look forward to and buying became unprofitable.

The lesson here is clear: Momentum is almost always temporary, and managing expectations is key to maintaining it. Projects can trade on hype, speculation, and Momentum, but they must also back it up with actions. If not, they risk losing their Momentum and struggling to regain it. This is where founder intervention can be critical, as a clear narrative and strategy can help manage expectations and keep holders engaged.

As for Token X, it remains to be seen if it can recover from its decline. But one thing is certain: the rise and fall of Token X is a cautionary tale for projects in the cryptocurrency space. Momentum can come quickly, but it can also disappear just as fast. Projects must be vigilant and proactive in managing expectations if they want to stay ahead of the curve.

NFT Market Update

As we don't have cash flow resources, and we want to kickstart our NFT project, it's not a great time because it is a pretty cash-flow intensive project tbh, and right now it's pretty hard to raise money as we start from zero. But I think it's a very good time to see the real projects survive and the fake ones get canceled because they simply cannot survive this crypto winter. Once the market stabilizes then that will be the time for our profitable launch. Until then we stay patient, keep shipping, and ride out the freeze.

NFT marketplace volume fell to just over $4 billion in May, from $7.2 billion the month before

Much of the volume came from OpenSea with approximately $2.6 billion. Other marketplaces that made significant contributions included Magic Eden, LooksRare, Solanart, Art Blocks, SuperRare, MakersPlace, Nifty Gateway, Foundation, and Async Art. In January 2022, total sales volume was approximately $16.57 billion with LooksRare leading the way with $11.1 billion for the month. May’s volume was $12.57 billion less than January’s—a 75% decline in just four months.

OpenSea’s volume for May was $890 million more than April ($3.49 billion), $980 million above February ($3.58 billion), and $2.37 billion over that of January 2022. LooksRare’s May volume of $1.06 billion was 67% below April’s $3.31 billion, 64% under March’s $3.02 billion, 85% less than February’s $7.41 billion, and 90% beneath January 2022’s $11.1 billion. Magic Eden is one of the biggest NFT marketplaces and recorded around $292.1 million in May. This was a 23% decline in January’s volume of approximately $380.87 million.

What's Next?

08-12: non-sovereign store of value (Bitcoin) 14-17: digitally-native global capital formation (Ethereum + ICOs) 19-21: decentralized, programmable transfers of value (DeFi + NFTs) 23-25: killer integrated apps (stuff normal people actually get to enjoy)

frictionless onboarding (mobile) scaling solutions (L1 bridges, L2s) immersive experiences & NFT utility

Through the noise and the commotion, we invite our community to keep building with purpose.

THE MINT

We are currently selling 1000 Membership Passes in a public mint for $1000USD in a dynamic ETH equivalency at the time of purchase. Our mint will stay open for a minimum 33-day period while we monitor progress. 

Our strategy during the initial sale of the Membership Passes:

We reserve the right to close the mint at any time. If there are tokens remaining, we may keep some in reserve and/or burn the balance. 

POST MINT

Our post-mint plan begins with the distribution of KYC 1099 (or international equivalent) documents and independent contractor agreements to all genesis pass holders.   We will allow an adequate timeframe for these documents to be filled out and returned.   Once this process is complete, we will launch our Marketplace.  The site is token-gated and includes a minting platform, user profiles, and a voting area for product development.   

THE COMPLIMENTARY GARMENT - OUR FIRST COMMUNITY-LED PRODUCT 

We will collectively work on our first product as a community, the “LTL” Sweatshirt.  The product will then be developed and produced upon approval.  The community will be updated throughout with images and information to better understand and be a part of both the design and manufacturing processes. 

THE FIRST COLLECTION - BY AND FOR THE COMMUNITY

Upon delivery of our complimentary garment, the community will begin work on a small men's and women's collection (SKU count TBD) that we will sell to the broader Web3 community.  Our Membership Pass holders will have preferred access to these products at launch, and/or may receive exclusive pieces for members only. 

Last updated