NFT collectors often refer to some of the most established collections as “blue chip” projects. This article explains what typically characterizes a blue chip NFT!
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As the NFT sector of the digital asset industry continues growing, with some projects whose market values soared to unthinkable heights, new categorizations for types of NFT assets and projects are being adopted by investors. One label of particular note is “blue chip,” a notion adopted from other traditional financial markets. Blue Chip NFTs are generally accepted as successful, established projects that have the best chance of long-term success and value.
“Blue Chip” is not an official label but more of an organic, community-driven designation. This article explains some of the factors that tend to cause investors and collectors to view any given NFT project as a blue chip or not.
Blue chip NFTs are generally considered by investors and collectors to have a high likelihood of holding its value for the long-term. The term originates from the traditional stock market. Blue chip stocks were those that were considered stable, trustworthy, and overall safe investments. Typically, these were stocks from well-known companies like Coca-Cola, Microsoft, Disney, or General Motors.
What makes blue chip NFTs a little more difficult is the fact that some of the ‘oldest’ NFT projects, like CryptoPunks, have only existed for five years. This means that in order for traders to consider it as a blue chip NFT project, they have to believe it will have longevity and hold its value over time. But just because a project is considered a blue chip now does not guarantee its long term success. And investors may decide in the future to stop giving that label to a project.
The following section lists a few characteristics that typically help an NFT project be seen as a blue chip.
New and experienced collectors should consider some of the following factors that may affect the longevity and value of an NFT project in the future.
Artists that already have a large audience and are widely recognized by the community will likely create NFTs that have more longevity than others that are less well-known.
One necessary benchmark to call a project a blue chip NFT is relatively high floor price, meaning the price of the cheapest NFT in the collection – typically above 1 ETH. But just because there is a high floor price doesn’t mean the project is a blue chip collection. And some project prices are inflated to this height (called a pump and dump scheme) and may not retain the value.
NFT investors should also consider a project’s sale price and trading volume. If prices are low and volume is low, interest in the project is probably also low, which could signal that the project is unlikely to receive blue chip status in the broader NFT community.
Celebrities bring power and coverage to blue chip NFTs and can make projects more successful. Some great examples are Reese Witherspoon buying ‘World of Women’ NFTs, Snoop Dogg, becoming a strong Sandbox advocate and Steph Curry, promoting Rumble Kong League. This shouldn’t be the key factor in any investment, and some blue chip NFT projects do not have any celebrity advocates to date. But it is something to take into consideration when evaluating which NFTs to purchase.
The utility of a blue chip NFT project could mean a greater chance of long-term market growth and value. Utilities are a benefit or perk or use case from certain projects. For example, purchasing a Coachella NFT also gave the owner exclusive VIP events at the festival. Other utilities could be gaming upgrades, t-shirts, and even extra NFTs. NFT projects with no usefulness could have a more difficult time being recognized as a blue chip, but this is not always the case.
Blue chip NFT communities are almost always active, engaging, and great places for like-minded collectors to discuss their interests and art. Without a strong community, projects are unlikely to survive long term, let alone be recognized as a blue chip collection. Oftentimes, the bigger the community, the stronger the underlying blue chip NFT project as it shows excitement from members who likely are future investors.
A few examples of NFT projects that are generally accepted as “blue chip” collections are listed below. Remember that the “blue chip” label is not an official categorization and can be disputed among different investors.
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