April 22, 2022 – As NFTs have gained prominence with celebrities, athletes, technologists and society writ large, these digital collectibles have firmly established themselves as a cultural phenomenon over the past year.
Thousands of NFT collections have been released. However, one collection has emerged as the leader of this burgeoning asset class.
One year ago, the Bored Ape Yacht Club NFT announced its mint (analogous to an IPO) at 0.08 ETH, the equivalent of approximately $220.00 per token.
Source: Twitter
Those who participated in the mint had a fortunate and fortuitous result if they continued to hold until today.
One year ago, minting a Bored Ape Yacht Club NFT turned into the greatest investment of all time, with a 270,000% annual return.
That’s right – a Bored Ape Yacht Club NFT went from $220 to $600,000 in value in just 365 days.
Source: Accelerate
A 270,000% return represents a life-changing investment that is highly unlikely to happen over multiple lifetimes. A 270,000% return in just one year is so wild it is nearly unbelievable.
For comparison, here are the total lifetime returns for some of the market’s most popular stocks:
Source: Bloomberg, Accelerate
As seen in the table above, the performance of the Bored Ape NFT matches or exceeds some of the most successful equities of all time. The significant difference is what took Amazon 25 years happened in just one year for an NFT.
The unmatched return provided by an NFT was driven not only by the original minted token but also by its subsequent spin-offs and airdrops (analogous to special dividends). For example, almost one-fifth of the return came from the recent Apecoin governance token released just last month.
Certainly, this asset class requires a leap of faith in order to participate. At the end of the day, an NFT is “just a JPEG”. However, Mickey Mantle’s rookie card, which just sold for $5.2 million, is just some ink on a piece of cardboard. Also, Leonardo da Vinci’s Salvator Mundi painting, which sold for $450 million, is just oil on canvas.
Art and collectibles have been an investable asset class for hundreds, if not thousands, of years. NFTs represent the digital transition of art and collectibles. That being said, art and collectibles are by nature speculative, and therefore extremely risky and volatile.
At the end of the day, as an investor, risk-adjusted returns are what matter. The way of dealing with asset risk is not by saying “no”, but by sizing the opportunity appropriately. For example, if an investor allocates 50bps of their portfolio to NFTs, then they attain exposure to this explosive upside potential without the risk of ruin if this nascent market fails (which is not out of the realm of possibilities given the high-risk level).
In any event, the nascent NFT asset class is still in its first inning. It will be exciting to watch the asset class develop over the next years and decades. Time will only tell if another 270,000% NFT return will occur.
-Julian
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Disclaimer: This distribution does not constitute investment, legal or tax advice. Data provided in this distribution should not be viewed as a recommendation or solicitation of an offer to buy or sell any securities or investment strategies. The information in this distribution is based on current market conditions and may fluctuate and change in the future. No representation or warranty, expressed or implied, is made on behalf of Accelerate Financial Technologies Inc. (“Accelerate”) as to the accuracy or completeness of the information contained herein. Accelerate does not accept any liability for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on all or any part of this research and any liability is expressly disclaimed. Past performance is not indicative of future results. Visit www.AccelerateShares.com for more information.
