As cryptocurrencies whipsaw investors, NFTs could emerge as a HODL of digital value
By: Tom Kennedy (firstname.lastname@example.org)
Cryptocurrencies just endured an intense, if somewhat typical couple of weeks of booms and plunges. NFTs came along for the ride in the spotlight. The question becomes, will NFTs play a role as a safe haven HODL amongst the digital asset classes?
It is important for me to admit I have no expertise in cryptocurrencies. In fact, the more I learn the more it becomes apparent that intelligent, well-researched individuals and teams are reaching expert conclusions that often contradict each other. Non-fungible tokens are a part of the same ecosystem, representing a digital asset in the owner’s wallet. NFTs, like fine wines and collectibles in the physical world, are far less liquid than say Bitcoin, but are positioned to be a meaningful part of the Alternative Investments portion of a diversified digital portfolio.
Figure 1: Alternative Investment Pyramid
In addition, alternative investments are creating opportunities, which allow investors of different sizes to participate, instead of just the super rich or sophisticated traders. As the pool of investable NFT assets continues to grow, creators and investors of all sizes will be able to diversify their portfolios as they manager their digital assets.
When Crypto Whipsaws NFTs share the spotlight — but not the same price swings.
In the past two weeks there have been big moves both up and down in bitcoin, the flagship cryptocurrency, and all other coins experienced similarly high volatility. As a recap of recent news, Elon Musk’s Tesla announced they had invested treasury cash into bitcoin, causing the price to go up. Then, Tesla reversed course, indicating the environmental concerns from bitcoin computations were not in line with Tesla’s practices. Bitcoin’s price fell.
Amplifying volatility this week were numerous announcements of hedge fund interest in bitcoin (bullish) followed by central bank challenges and geopolitical risks (bearish). There were literally episodes of panic selling and confident buying in the same days. In sum, bitcoin went from ~US$65,000 in April to under $32,000 last week and back up to ~$36,000 all in a few days. At the same time as crypto’s most recent rollercoaster, NFTs got lots of renewed press — which I will claim is positive for exposure and thus value.
Over time, I believe NFTs will become a key part of a digital investor’s alternative asset portfolio. In addition to portfolio diversification, the royalty structure within an NFT lends itself to the yields produced by many traditional alternative investments. All the while the NFT represents rights to intellectual property ownership.
Great example: NFTs could be the basis of the next pop culture “franchises.” Franchises mean ongoing value creation.
This week, media entrepreneur Gary Vaynerchuk predicted that NFTs may be the basis of the next pop culture franchise, the same way playing cards were to Pokemon, books were to Harry Potter, and movies with special effects were to Star Wars.
As non-fungible tokens continue to evolve in use cases and adoption, it is clear that they will form an important component of Alternative Assets for the next era of investors, retail and institutions alike. Just like with traditional collectibles, NFTs will represent a meaningful store of value in a digital portfolio that balances out the volatility and risk profiles of other more accessible or liquid asset classes. History repeats itself with new music.
© 2021 Thomas Kennedy. All rights reserved. See Disclosure Statement
Disclosure Statements: Please view the Disclaimer
This report has been prepared on behalf of Liquid Avatar Technologies Inc. and it’s subsidiary, Liquid Avatar Operations Inc. (formerly, KABN Systems North America Inc), effectively “Liquid Avatar” or the “Companies” and is confidential and proprietary. It does not purport to contain all the information that a prospective investor may require in connection with any potential investment in the Companies or related program(s). You should not treat the contents of this report, or any information provided in connection with it, as financial advice, financial product advice or advice relating to legal, taxation or investment matters.
This report does not include all available information in relation to the business, operations, affairs, financial position or prospects of the Companies. No representation or warranty (whether express or implied) is made by the Companies or any of its shareholders, directors, officers, advisers, agents or employees as to the accuracy, completeness or reasonableness of the information, statements, opinions or matters (express or implied) arising out of, contained in or derived from this report or provided in connection with it, or any omission from this report, nor as to the attainability of any estimates, forecasts or projections set out in this report.
This report is provided expressly on the basis that you will carry out your own independent inquiries into the matters contained in the report and make your own independent decisions about the business, operations, affairs, financial position or prospects of the Companies. The Companies reserves the right to update, amend or supplement the information contained in this report at any time in its absolute discretion (without incurring any obligation to do so) without any obligation to advise you of any such update, amendment or supplement. The delivery or availability of this report shall not, under any circumstance, create any implication that there has been no change in the business, operations, affairs, financial position or prospects of the Companies or that information contained herein is correct after the date of this report.
Neither the Companies nor any of its shareholders, directors, officers, advisors, agents or employees take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortuous, statutory or otherwise, in respect of the accuracy or completeness of the information contained in this report, for any errors, omissions or misstatements in or from this report or for any loss howsoever arising from the use of this report. Any such responsibility or liability is, to the maximum extent permitted by law, expressly disclaimed and excluded.
This report does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for or purchase, any securities of the Companies, nor shall it form the basis of or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment whatsoever with respect to such securities. Under no circumstances should this report be construed as a prospectus, advertisement or public offering of securities.
This report may contain reference to certain intentions, expectations, future plans, strategy and prospects of the Companies. Those intentions, expectations, future plans, strategies and prospects may or may not be achieved. They are based on certain assumptions, which may not be met or on which views may differ and may be affected by known and unknown risks. The performance and operations of the Companies may be influenced by a number of factors, many of which are outside the control of the Companies. No representation or warranty, express or implied, is made by the Companies, or any of its shareholders, directors, officers, advisers, agents or employees that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved.
Given the risks and uncertainties that may cause the Companies actual future results, performance or achievements to be materially different from those expected, planned or intended, you should not place undue reliance on these intentions, expectations, future plans, strategies and prospects. The Companies do not represent or warrant that the actual results, performance or achievements will be as intended, expected or planned.
The information contained in this report includes some statement that are not purely historical and that are “forward-looking statements.” Such forward-looking statements include, but are not limited to, statements regarding our and their management’s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “would” and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The Companies seek Safe Harbor.