Bankroll Management and Liquidity - MVHQ

Bankroll Management and Liquidity

Feb 15, 2023
General Strategy
Bankroll Management and Liquidity

Why do the best deals appear when I’m out of money?


When did I buy so many NFTs from the same crappy project?


What will get me out of this mess?!?


If you ask yourself these questions, it's time to analyze your Bankroll Management.


Your NFT Bankroll is the total amount you’re willing to lose. Never include money in your Bankroll that you need to pay for food, bills, loans, medical needs, credit card debt, or anything else important. If you lose your entire NFT Bankroll, I want you to still be able to live your life in the "real world."


So how much is your Bankroll? Come up with a specific number. I'll wait...


Next, calculate the real, liquid floor value of your current NFT collection, which is the money you would receive from a complete firesale of everything except for your last Metaverse HQ membership key. Be honest with yourself about how much you would get. Do some rough math and come back with an estimate.


Now, compare your Bankroll number to the value of your collection. If your intended Bankroll is less than the value of your collection, it’s time to strategically sell some of your collection and cash out to reduce risk. But if your Bankroll is greater than the value of your collection, then that extra money is your Liquidity.


Liquidity is the lifeblood of succeeding in the NFT space. I strive to have enough Liquidity to invest in at least three new projects at all times:


  1. The next project I’m excited about.
  2. The surprise opportunity that comes up.
  3. The crazy opportunity that will be even more profitable than #1 or #2.


Constantly evaluate your Liquidity-to-Bankroll Percentage. My ideal Liquidity Percentage changes based on my Bankroll size. The bigger your Bankroll, the smaller your Liquidity Percentage can be.


If your Bankroll is 1 ETH, I recommend targeting 60% Liquidity so you can spend .2 ETH on three different quick flips. That’s about the average mint+gas cost for hot gas-war projects or the cost of a few mints on a cheaper project. That gives you three shots to mint something rare, and it spreads your risk across three projects. With only 1 ETH, you don’t have much room to wait on long-term projects to develop. When the opportunity arises, take profits to grow your Bankroll.


If your Bankroll is 10 ETH, I recommend around 30% Liquidity. This allows you to mint several NFTs from at least three projects. You could mint three and try to sell two to cover your costs. Or you might mint five and try to sell three to cover your buy-in. Your collection can have more long-term investments when you have a bigger Bankroll, but selling to churn your collection is still important to maintain Liquidity.


Regardless of your Bankroll size, you should list more for sale than is required to hit your Liquidity target. Not all of your listings will sell, and you don't want to panic-sell anything to buy into the mint-du-jour. You have to go with the flow of the market to maintain Liquidity, and there will always be a hot new project to mint.


So let's recap:

  1. Define your Bankroll.
  2. Set a Liquidity target.
  3. Churn your assets to achieve your goals.


Don't be rigid, but have a plan. The NFT space changes fast, so reevaluate regularly.


Buy NFTs at your own risk. This is not financial advice, but hopefully, solid Bankroll Management and maintaining Liquidity will create more opportunities for you to succeed. I hope your rare traits are plentiful and your sales are huge.


Do you have questions or want to share a different approach? If so, I'd love to chat with you more. Best of luck, and thanks for traveling through the Metaverse with us.