The Non-Fungible Token (NFT) market has seen incredible growth over the past couple years, with sales volumes surging into the billions of dollars as digital artworks, collectibles, and more were tokenized on blockchains.


While the market may be down, it doesn't mean NFTs are going away or that there aren't still opportunities. Every market goes through cycles, and there are strategies NFT enthusiasts can use to weather the storm of the current bear market. Here are some approaches to consider:

Focus on High-Quality Projects

When the market is hot, even low-quality NFT projects can get traction as speculators rush in trying to find the next big score. But in a bear market, low effort and gimmicky projects are likely to struggle the most. Shift your focus in a bear market to the highest quality NFT projects with real long-term viability. Look for things like:

- Strong, dedicated teams behind the project that are in it for the long-haul. Avoid projects where the founders are anonymous or seem like they'll lose interest when the hype dies down.

- Utility that provides long-term benefits to holders, like exclusive access, rights, or privileges. NFTs that are solely art tend to be more vulnerable to market fluctuations.

- Established brands or intellectual properties that have an existing fanbase. Collaborations between artists and brands can also achieve this.

- Healthy existing communities that believe in the project's vision, not just to make a quick buck. Official social channels with engaged followers are a good sign.

The best projects are creating real value beyond just hype and speculation - these are the ones most likely to ride out bear markets and lead the next resurgence.

Dollar-Cost Average Over Time

Timing exactly when to buy into an NFT project is extremely difficult, even for experts. Dollar-cost averaging (DCA) is a strategy where you spread out your purchases over weeks, months, or longer - buying a fixed dollar amount regardless of the current market price. This levels out your entry price over time instead of making one big buy at the wrong moment.

DCA is ideal for a bear market, allowing you to steadily accumulate quality assets while prices are depressed. And it helps avoid blowing your entire budget on a single purchase right before further drops. Be patient and disciplined, setting aside funds to deploy over regular intervals.

Buy the Floor

In NFT collections like CryptoPunks, Bored Ape Yacht Club, and others, “the floor” refers to the cheapest listed price for any NFT in the set. Buying floor items is generally one of the most affordable ways to get your foot in the door with top tier projects. Monitoring floor prices can reveal good entry points.

When overall sentiment is down, it pushes the floor lower - presenting opportunities. You can then aim to eventually sell when the floor rises again during a bull run. This strategy takes strong nerves through bear cycles, but can pay off later. Always do your research and buy quality floors with upside potential.

Hunt for Discounts

NFT sellers adjust their target prices based on the market's momentum and sentiment. When things are down, some may become motivated to sell below prevailing floors or at other discounts not typically available in better markets.

Keep an eye out for deals being offered quietly through a project's Discord or Telegram channels. Or make reasonable offers on NFTs you like that are 10-25% below current floors to see if any will accept during the bear slump. The lowest bidder doesn't always win, but discounts may be there for the taking.

Sell Into Strength; Buy Into Weakness

Markets move in cycles between greed and fear. The optimal time to sell is when greed dominates and prices get overextended on the upside. And the best buys come when markets are overcome by fear. Don't get too attached to your holdings - be ready to take profits after strong runs and redeploy capital into panic drops and corrections.

This contrarian approach requires avoiding the herd mentality of buying when prices rocket or selling at the first sign of declines. By selling into excessive greed and buying into excessive fear, you improve odds of making gains over the cycles versus buying and holding indefinitely.

Target Newly Launched Projects

New quality projects launching into a bear market can be an opportunity, especially if you get in early while initial valuations are depressed. Do your research and identify promising emerging NFTs that haven't taken off yet. Join their communities, understand the roadmap, and assess if they have what it takes to gain traction when markets eventually turn.

Buying into new launches early comes with risks of course, with many destined to fail. So spread your capital across multiple emerging contenders to mitigate risk while still benefiting from those that rise. Getting in on the ground floor of the next blue chip projects could pay off enormously when the bulls return.

Sell Peripheral Assets; Consolidate Into Core Holdings

When markets look shaky, it’s prudent to consolidate capital into your highest conviction holdings. Evaluate all your NFTs and consider selling those considered peripheral or non-essential. Rotate the proceeds into strengthening core positions that align with your long-term vision.

Holding a large number of speculative minor assets increases fees, taxes, risk of theft, and more. Consolidating into key holdings streamlines your portfolio with fewer, larger stakes while still capturing upside. And reducing total number of wallets and transactions improves security - especially important in bear markets plagued by scams.

Stake Long-Term Holdings

Top NFT projects will sometimes allow holders to stake their collectibles through smart contracts or DAOs in return for rewards like expanded utility or token airdrops. Staking provides another way to generate yield on holdings during downturns.

For example, staking CryptoPunks on Larva Labs' contract allows holders to earn $ETH and participate in votes concerning the project’s future. Evaluate staking options to put idle NFTs to productive use, recouping some value while also aligning incentives with the project’s success.

Lend and Leverage Wisely

Services like NFTfi and NFT20 allow users to deposit NFTs as collateral in return for cash loans or assets like stablecoins or ETH. The loans enable liquidity to holders without having to fully sell the underlying NFT. Rates fluctuate based on market conditions and loan-to-value ratios.

Borrowing against your NFTs in moderation can provide downside protection, but don't get overextended. If you default on loans or margins calls during crashes, lenders can seize and sell your collateral. Only borrow what you can comfortably repay even in expanding bear market conditions.

Diversify Outside NFTs

The NFT market will have correlations to the broader crypto industry, so diversifying across uncorrelated assets helps smooth out volatility. Consider allocating a portion of your capital into areas like real estate, stocks, commodities, cash, or cryptocurrency index funds. These may perform differently than NFTs - rising while NFTs drop and vice versa.

Diversification allows you to reduce concentrated exposure to NFTs and mitigate against bear trends. Rebalance occasionally back into NFTs when the segment is underweighted relative to targets. Diversifying across markets enhances stability and lets you take advantage of the best opportunities.

Reduce Speculation; Focus on Long-Term Value

Bubbles and hype disproportionately drive NFT markets compared to traditional asset classes. But speculative manias are unsustainable - bear markets are the inevitable result as euphoria fades. Transition to a long-term, fundamentals-based mindset versus trying to predict short-term price action or make a quick buck.

Study and understand use cases, community engagement, competitive dynamics, & project roadmaps. Then make informed investments in valuable NFTs aligning with your thesis, not based on hype. Reduce turnover; invest with multi-year time horizons. The projects creating fundamental utility and value will persevere through volatility. 

Embrace Bear Markets as Necessary and Temporary

It can be demoralizing when portfolio values plunge during bear markets, but they are ultimately necessary phases in any market cycle. The excesses and hype of bull markets must be purged for the next sustainable uptrend. Without bear markets, markets would become bloated bubbles that implode catastrophically.

Don't panic - bear markets are temporary. Growth cannot be linear; periodic pullbacks must occur even in secular bull markets to periodically reset sentiment and valuations. The long-term NFT thesis remains compelling - blockchain provably scarce digital assets are here to stay. Be ready to make your moves when the inevitable recovery arrives.

Take Breaks and Focus on Health

Obsessively monitoring portfolio value fluctuations during bear markets can be exhausting and damaging to mental health. Remember to take breaks, maintain relationships, get exercise, eat well, and focus on activities outside of the NFT space that enrich your life.

No one can perfectly time markets in the short-term. Step back and let market cycles play out while focusing on improving yourself and reducing stress, then judiciously make moves at logical points. Your long-term well-being is far more important than daily price changes.

Collaborate and Learn From Other Traders

Bear markets are the perfect time to expand your knowledge, analyze past strategies, and refine your approach. Reach out to and collaborate with other experienced NFT traders, joining communities and discussing ideas. Shared wisdom and different perspectives can accelerate your learning, even if you ultimately invest independently.

Compare notes on valuations, due diligence processes, trading tactics, security protocols, tax/legal considerations, and more. Brainstorm creative strategies for navigating the changing landscape. Strengthening your network expands possibilities - two minds are better than one.

Tax Loss Harvest

Selling NFTs at a lower price than you paid for them realizes capital losses. These capital losses can be used to offset taxes on capital gains from other NFT sales or investments. This is known as tax loss harvesting - reducing tax liability by strategic realization of losses to offset recognized gains.

Evaluate your NFT portfolio and consider selling at a loss to crystallize deductions. Just be aware of the wash sale rule, which disallows claiming a loss if buying a substantially identical asset within 30 days before or after the sale. Manage the timing of sales to efficiently utilize losses while adhering to regulations.

Master Security Best Practices

Unfortunately, scams and exploits tend to proliferate during crypto bear markets as some turn to shady activities out of desperation. Be vigilant about scams and phishing attempts. Never click suspicious links or give out your seed phrase or passwords.

Enable maximum account security settings, use hardware wallets, and spread holdings across multiple wallets. Monitor activity closely and set email/text alerts. Bear markets require heightened vigilance to avoid becoming a victim. Master security best practices to protect assets.

Keep Your Vision Long-Term

It’s easy to lose sight of the big picture during the gloom of bear markets. But the long-term trajectory for NFTs and blockchain remains positive. The value of provable digital scarcity and ownership will only grow as more of our world goes digital.

Stay focused on the future and don’t let short-term volatility alter your course. Block out the noise and keep your vision grounded in fundamentals rather than hyperbole. Bear markets purge the excesses, leaving projects with real utility standing tall when the bulls return. Patience and perspective are key.

NFTs have opened up transformative new paradigms in technology, economics, and communities. Like any new market, challenges and volatility should be expected. But opportunities still await savvy investors willing to learn, adapt, and selectively deploy capital during bear as well as bull runs.

Stay disciplined, diversify, collaborate, innovate, and keep your focus long-term. The projects solving real problems and creating fundamental value will outlast the hype cycles and provide the strongest returns over time. Maintain belief in your vision and be ready for the gains when the bulls return. With preparation and proper strategy, the NFT winter won't last forever. Exciting futures still await.