The founders of an Andreessen Horowitz-backed NFT fund that has raised $100 million share their top 5 tips for building a digital art portfolio that is well-protected from a potential “crypto winter.” Brandon Buchanan and Nabyl Charania manage Meta4 Capital’s NFT fund. As Somanews, we present to your attention the 5 most important tips for creating a digital art portfolio.
NFT market rises to $2 billion
Brandon Buchanan and Nabyl Charania have been blockchain missionaries since 2014. But it was only this year that Meta4 Capital co-founders began to see NFTs as viable investment assets. According to JPMorgan, the market for NFTs has soared this year, with monthly sales jumping from $400 million to $2 billion. Brands like CryptoPunks and Bored Ape Yacht Club have benefited from the attention of high-profile investors, including NBA star Stephen Curry and socialite Paris Hilton. “Celebrities only do so much about mass adoption,” Charania said in a recent interview.
Charania was talking about Meta4’s first NFT fund, which was launched in October. He and his business partner Buchanan have secured initial funding from leading venture capital firm Andreessen Horowitz and are targeting a total investment of $100 million. Buchanan said:
Fundraising is going great. These things always take a few months and it’s very difficult to get large institutions involved, but since we announced it at the end of October, a little over a month ago, we’ve talked to everyone. People can feel that there is something very dynamic going on with NFTs.
While the high volatility of NFTs has attracted many speculative day traders, Buchanan said he and Charania are looking to bring institutional investors into the space by offering more stable returns from a larger alternative asset fund. “We want to enable investors to invest broadly in the asset class,” the executive said.
create a portfolio
Insider spoke with Meta4’s co-founders about ways to invest in retail in the NFT space. He also asked them if they are currently worried about a balloon. Away from the world of $100 million funds, there is still a path to the NFT space for crypto-savvy retail investors who can invest in a market like OpenSea or create and sell their own digital art. Buchanan acknowledged that building an NFT portfolio isn’t possible for everyone. He told Insider that the ideal amount to start investing is around 5 ETH, or just over $20,000. “But there are ways for people who don’t have millions of dollars,” he added.
Buchanan’s first tip is that retail investors should always be wary of NFT scams. These have been a concern for regulators in the crypto space due to the rise of counterfeit tokens and insider trading on OpenSea. “You need to do your own research because it can be difficult to identify the tricks,” Buchanan says. “There are so many projects emerging, so there will be a lot of scammers and a lot of people who want to speculate and make quick money will inevitably be scammed.”
According to Charania, focusing on marquee brands could be a way to avoid NFT scams. He said Meta4 only tracks well-known brands like Bored Ape Yacht Club, CryptoPunk, CryptToadz, and Zed Run, as well as verified creative artists like Dmitri Cherniak and Mitchell F. Chan. “My personal preference is to support known projects or artists, even if the entry point is higher,” Charania said. “I recommend everyone do their own research, resolve disagreements on projects you like, and try to understand the community and value proposition of the project you want to get back at,” the manager added.
Buchanan also recommended investing in new artwork. This refers to digital artworks recently stored on a blockchain. He said investors are more likely to find bargains targeting these assets, as opposed to longer-floating NFTs. “I am looking at the Art Blocks release schedule and looking for new collections, you can get some of them for 0.25 ETH,” he told Insider. According to Buchanan, tracking whale wallets is another way to find undervalued NFT gems. Buchanan says:
One of the nice things about blockchain is that everything is on a public ledger so you can look at major wallets and see what they’re buying. Imagine being able to see Warren Buffett’s trading strategy as it is – you can really do that with NFTs.
Finally, Buchanan and Charania agreed that individual investors should subjectively buy, invest in NFTs because they appreciated them on an artistic level, not just for speculative reasons. Buchanan told Insider, “I encourage people to buy artwork that you really like and are genuinely interested in, not just the idea of speculation. When I look at my cryptocurrency wallet, I see items that I bought and that give me joy. Making money is an added bonus,” he said.
Crypto billionaire and Galaxy Digital founder Mike Novogratz warned of an NFT bubble earlier this year, arguing that high prices are “not normal in any way, shape or form” and said that “markets don’t go flat forever.” Some analysts are even worried about a bubble in the entire crypto space, with Bitcoin and several metaverse coins slipping over the past few days as the potential impact of the Omikron Covid variant and India’s crypto ban boosting sales. Not surprisingly, Buchanan and Charania ignored balloon concerns. They noted that there is significant price volatility in traditional art investments as well.
Charania said Meta4’s investment strategy to focus on verified new brands would protect their portfolios should the market crash. The entrepreneur said:
We focus on top-of-the-line or extremely rare or collectible NFTs where market fluctuations or concerns about a bubble do not play a significant role in determining the value of assets. Being secure is important, and we are configured to survive another ‘crypto-winter’.