Ordinals represent a unique form of leveraged BTC on the blockchain, immune to traditional liquidation. However, they're not without risk; a complete lack of trading volume could spell trouble. Think of them as a way to bet on BTC's success directly on the blockchain.
This approach simplifies things. Instead of getting bogged down in the specifics of the inscription or technology, consider it as having a fivefold leverage on BTC on the blockchain. Yet, this comes with caveats:
- The degree of leverage varies based on the project team and the story behind the ordinal.
- The risk of the value dropping to zero varies depending on how well the market receives the ordinal.
- There's a risk of losing your ordinal through mismanagement, such as sending it to an incorrect wallet or due to security breaches.
Understanding these points sets you on the right path. The next step involves:
Treating Ordinal collections like speculative assets and evaluating their market capitalization against similar Ethereum-based assets to determine if they are undervalued or overvalued.
Currently, there's frustration over certain ordinals reaching high prices, but when compared to similar assets on Ethereum, it seems almost expected.
Comparing market caps reveals:
- Punks on Ethereum are valued at approximately $1.995 billion.
- Pengus on Ethereum are at around $466.62 million.
- Nodes valued in BTC are at approximately $552.5 million.
- Puppets, also valued in BTC, come in at around $178.75 million.
Success comes from identifying successful Ethereum narratives and applying them to BTC.
It's straightforward. Success stories like Nodes and Puppets on BTC were about recognizing community-driven opportunities and acting early. There was a significant window to capitalize on these opportunities.
Additionally, innovative projects like the Vivid collections and on-chain generative art such as BitGlyphs are worth attention. BitGlyphs, being the first on-chain generative art on BTC, have a unique appeal due to their originality and narrative, potentially leading to higher valuations. Compared to Ethereum's Autoglyphs, BitGlyphs present a clear opportunity for discerning speculators.
In terms of trends within Ordinals to watch:
- Look for mint passes by renowned artists that generate immediate hype and trading volume.
- Consider assets reminiscent of EtherRock, which command high prices not just for their rarity but as a status symbol of early adoption or significant investment.
- Focus on gaming NFTs for characters in blockchain games, akin to previous cycles' standout projects. The strategy is to acquire early and sell when the hype peaks.
