Welcome to the Monopoly Man’s column here at NFT Plazas. I’m Nate, and in this new column, I’ll be covering the overlap between economics and NFTs. Over the past year, I’ve had the opportunity to meet with world-class NFT collectors: CryptoPunk hoarders, Bored Ape aficionados, and even a few 0N1 Force holders (AKA new money). When I see such impressive wallets, I try to understand their purchasing behavior and decision making.
A question that I almost always ask these elite collectors is, “do you consider the underlying value of the USD to ETH when you buy or sell an NFT?” Without fail, every response I’ve received so far is ‘no.’ The response is typically qualified with ‘there are too many moving pieces!’
Well NFT community, until you can pay for your groceries or rent in ETH, the ratio of ETH to your home currency should matter! So, how do you even go about tracking this multi-layered data?
Take this Weird Whale ($WHALE) purchased in late July. It cost .25 ETH. But, also consider the underlying value of ETH at the time of purchase, $1,786.52.
While the value of Weird Whales ($WHALE) has dropped by about 10% since this purchase, the value of ETH has risen almost 70% (currently round $3100). With all of these moving pieces, I needed to find a simple way to track my possible profits and losses.
Track your investments (outside of OpenSea)
When I entered the world of NFTs, I did what any econ nerd would do, I made a spreadsheet. I tracked how much I paid for it. I logged the underlying USD:ETH value at the time of purchase. However, with crypto price fluctuations, I still didn’t know my breakeven sale price.
Isolate the moving pieces
Through the magic of the =googlefinance() function, we’re able to track real-time crypto prices on a spreadsheet. This means, any profit and loss guesswork is eradicated. See below for the Google Sheets functions reflecting the ETH price in a few major currencies.
|Currency||Google Sheets function|
|United States Dollar||=googlefinance(“currency:ETHUSD”)|
|British Sterling Pound||=googlefinance(“currency:ETHGBP”)|
(If you’re an Excel purist, check out this YouTube video relaying the steps and formula to execute on Microsoft Excel.)
Find your ETH: fiat breakeven
Now that you have the current ETH price, and the price in fiat that you paid for your piece, you can easily identify your breakeven ETH sale price. Simply divide the cost you originally paid for the piece by the current ETH price.
If you understand your NFT breakeven sale price, you can game the system to your benefit. For example, if your NFT drops in value but, the underlying value of ETH increases, you may sell for an ETH loss with a fiat gain! Inversely, if the value of ETH drops, and you sell your NFT for an ETH gain, you may still be at a fiat loss. On the opposite end, if the value of ETH increases and the value of your NFT increases, you can track your compounding profits.
It is important to understand the dynamic between fiat, crypto, and NFTs in order to come out on top!
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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.
Futurist hedged against traditionalism