Key Terms

TLDR

• This report examines the NFT portfolios of a high-signal pool of NFT-related Smart Money addresses that also have a blue-chip NFT in their portfolio. This subset of addresses will aim to highlight potential blue-chip NFTs that are being held through the bear market (long-term conviction).
• The average blue-chip portfolio size for the addresses in this set is approximately 600 ETH and 30 NFTs from 3 different collections. For non-blue-chip holdings with a portfolio value per collection greater than 5 ETH, the average portfolio size is 276 ETH and 664 NFTs from 7 collections.
• Out of all the blue-chip collections, in general, Smart Money blue-chip NFT holders have the highest conviction in CryptoPunks. CryptoPunks have the biggest Smart Money blue-chip NFT holder representation relative to the collection size, the most considerable proportion of addresses in the dataset holding it as their single largest investment, as well as their top 3 holdings.
• A case study into the Smart Money blue-chip NFT holders' ownership distribution for Chromie Squiggles shows that the conviction is not evenly shared among entities in this dataset. Even though the collection has the second-highest Smart Money blue-chip NFT holder representation behind CryptoPunks, the top 5 Squiggles holders from this cohort account for over 60% of the distribution.
• The ratio of addresses that own Mutant Ape Yacht as their top 3 holdings is greater than that of Bored Ape Yacht Club. Specifically, 15.3% of entities own Mutant Ape Yacht Club in their top 3 investments, compared to 14.8% of Bored Ape Yacht Club.

Introduction

The NFT sector has been in a downtrend since the beginning of May 2022. During the weekly close on May 2nd, the weekly volume peaked at approximately 572k ETH. However, activity has decreased significantly since then. Weekly volume has stabilized at 70k-80k ETH per week for the past few months.

Despite the relative lack of interest, the sector is still rapidly innovating and strengthening its infrastructure. Much of the focus has been geared toward improving upon the liquidity issues facing NFTs today. Some of these solutions include NFTfi, Sudoswap, and more. Robust infrastructure is key to sustainable growth in the long term, and with the lack of eyes currently tracking the NFT market, this period provides the perfect opportunity to build and invest for the next bull market.

Purpose

The bear market is also the time to strategize and identify potential winners for the next cycle. In this report, we will dissect the portfolios of Smart Money segments that currently own blue-chip NFTs to uncover which collections (blue-chip and non-blue-chip collections) they are holding with conviction through the bear via on-chain data. This report is steered towards shining light on potential long-term acquisitions rather than short-term flips.

Methodology

Constructing The Core Dataset

The core dataset used in this report comprises a list of Smart Money addresses that also hold blue-chip NFTs. While Nansen has ~5,430 addresses with at least one Smart Money label, only NFT-related Smart Money labels are accounted for in the dataset. NFT-specific Smart Money labels consist of Smart NFT Trader, Smart NFT Hodler, Smart NFT Early Adopter, Smart NFT Minter, Smart NFT Sweeper, and Smart NFT Airdrop Pro. The requirements for a wallet to be considered as one of these segments are highlighted above in the Key Terms section. As of October 7th, there were 916 addresses with at least one NFT-specific Smart Money label. Information about other Nansen labels can be found here.

The list of addresses tagged as NFT-related Smart Money labels is then filtered down to addresses that currently hold at least one blue-chip NFT. The wallets that fall into both datasets make up the core dataset used for this report. As of October 7th, 73,855 wallets own at least one blue-chip NFT, 366 of which are considered Smart Money blue-chip NFT holders, which is the subject of this study.

Source: Nansen Query Data as of October 7th, 2022

Identifying Blue-chip Collections

By definition from Nansen's NFT Index Methodology, which outlines the criteria for each category in the Nansen NFT Indexes, the blue-chip collections are the top-10 NFT collections ranked by market capitalization. The index updates at the start of every quarter, and the constituents are adjusted accordingly. For this quarter, the top 10 collections are:

Source: Nansen Query Data as of October 7th, 2022

Query Questions

For this analysis, we separate our investigation into two categories: blue-chip and non-blue-chip holdings. For their blue-chip assets, we want to investigate:

1. The distribution of blue-chip collections held as the largest investment for each wallet
2. The distribution of blue-chip collections held in the top 3 investments for each wallet
3. The average size of their blue-chip NFT portfolios denominated in ETH
4. The average balance of blue-chip assets in their portfolios
5. The percentage that these holders take up relative to the collection size

A deeper look using on-chain data can give insight into which collections this segment of holders has the highest confidence in on average. The calculation for the portfolio value per collection that each address owns is defined as:

Similarly, we also want to surface the specific top non-blue-chip collections held by this cohort and their relative size, which signifies their conviction. Pinpointing these non-blue-chip collections could hint at the projects that could be promising.

Note that for non-blue-chip collections, the minimum portfolio value per collection must be greater than 5 ETH. Since these wallets are Smart Money and also own a blue-chip NFT, they are likely to receive spam NFTs. Setting a minimum eliminates any low-conviction holds and only funnels their most valuable non-blue-chip NFT assets.

Blue-chip and Non-blue-chip Allocation Statistic Comparison

Source: Nansen Query Data as of October 10, 2022 Note: For non-blue-chip collections, only those with a portfolio value per collection greater than 5 ETH are counted.

The table above displays the number of unique addresses from the dataset that have allocations to each category. Most of these investors also have investments outside blue-chip collections, with only 33 entities exclusively invested in blue-chips. 181 wallets have allocations to at least 3 different blue-chips, while 239 wallets hold at least 3 non-blue-chips with a portfolio value for each collection worth over 5 ETH.

Blue-chip Holdings

Break Down Of Each Smart Money NFT-related Segment

Source: Nansen Query Data as of October 10, 2022 Note: Some addresses are classified as more than one segment.

The table above shows the distribution of each NFT-related Smart Money segment and the proportion of those entities that currently own a blue-chip NFT. Of the 916 addresses with an NFT-Smart Money label, 396 also fall into the category of blue-chip NFT holder, translating to around 43%. Moreover, 30 of these addresses are tagged with more than 1 NFT-related Smart Money label, as the core dataset consists of only 366 unique addresses.

Surprisingly, while there are 131 Smart NFT Minters, none of these wallets hold a blue-chip NFT. In contrast, Smart NFT Early Adopters and Smart NFT Airdrop Pro labels have the highest percentage of blue-chip holders within their segment at 90% and 88%, respectively.

Distribution Of Blue-chip Collections Owned By This Cohort

Source: Nansen Query Data as of October 10, 2022

The result of extracting the blue-chip positions for each of the 366 addresses within the dataset is shown above. While Otherdeed land plots and Sandbox LANDs are some of the most held collections by count, the Smart Money blue-chip NFT holders represent the lowest ownership percentage relative to the collection size for these two projects out of all blue-chips, alongside Moonbirds.

The low percentage of Smart Money blue-chip NFT holders' representation in metaverse land plots could be due to the vast supply of assets within the collection. The lack of scarcity means that it is harder for significant price movements. In addition, the development within each of the metaverses is still nascent. There has not been a catalyst that would propel the demand for these land plots yet.

On the contrary, CryptoPunks and Chromie Squiggles are the only collections with double-digit Smart Money blue-chip NFT holder representation at 14.71% and 10.52%, respectively. This statistic could be an indicating factor that, in general, Smart Money blue-chip NFT holders have the highest conviction in CryptoPunks. However, this may not be true for Chromie Squiggles, according to the data shown in the pie chart below.

Top Blue-chip Collections Held By Each Address

Single Largest Holding

The pie chart above shows the distribution of the single largest blue-chip position for each wallet in the cohort. Undoubtedly, CryptoPunks and Bored Ape Yacht Club have the most amount of wallets holding them as the most significant blue-chip NFT position, differing by just 0.5% in favor of CryptoPunks. CryptoPunks and Bored Ape Yacht Club together account for ~53.1% of the addresses. CloneX ranks third, taking up 11.5% of the distribution, followed by Azuki at 8.8%.

Check out a recent Twitter thread on diving deep into Smart Money data for Azuki here.

Top 3 Biggest Holdings

As seen by the chart for the top 3 holdings, the spread is much more even in comparison to that of the single largest blue-chip holdings. An interesting point to highlight is that more Smart Money blue-chip NFT holders own Mutant Ape Yacht Club as their top 3 blue-chip assets than Bored Ape Yacht Club. The proportion of wallets holding Mutant Ape Yacht Club sits at 15.3%, whereas 14.8% hold Bored Ape Yacht Club.

Note that while there are fewer wallets with at least 3 different blue-chip and non-blue-chip collections in their portfolio, the algorithm will still include the top holdings for a wallet even if they have less than 3 unique collections. Therefore, the dataset size remains at 366 and 333 for the top 3 blue-chip and non-blue-chip holdings, respectively.

A Case Study Into Chromie Squiggles

As mentioned earlier, although Chromie Squiggles have the second-highest Smart Money blue-chip NFT holder allocation, on aggregate, these entities may not actually have the highest conviction in the project.

Chromie Squiggles have the joint-third lowest percentage of wallets as their single largest blue-chip position. Nonetheless, the collection takes up 8% of the distribution when evaluating the top 3 blue-chips owned by each wallet.

The data suggests that even though Smart Money blue-chip NFT holders account for over 10% of the Chromie Squiggles supply, most of the assets belong to a small cluster of wallets that belong to the cohort.

Source: Nansen Query Data as of October 10, 2022

Zooming in on the individual addresses within the dataset with the highest balance for Chromie Squiggles, we can see that this is most likely the case. The top 5 Smart Money blue-chip NFT holders of Chromie Squiggles account for 634 of 1018, equivalently 62.3%. The largest holder, "0x_NFT" on OpenSea, alone takes up 24.4% of that distribution. Hence, the conviction for Chromie Squiggles lies with a small number of wallets rather than a general consensus of the addresses within the core dataset.

Non-blue-chip Holdings

Top Non-blue-chip Collections Held By Each Address

Single Largest Holding

Bored Ape Kennel Club is the most common collection that Smart Money blue-chip NFT holders have their single most considerable allocation, excluding blue-chips, by some margin. Meebits have the second-highest allocation percentage at 5.4%.

Generally, the most allocated collections by aggregate position value for these entities are the secondary collections from those in the blue-chip category. According to this chart, excluding Autoglpyhs, the top collections include Bored Ape Kennel Club, Meebits, BEANZ Official, and RTFKT X NIKE MONOLITH. All of these are secondary collections of either Bored Ape Yacht Club, CryptoPunks, Azuki, or CloneX. These entities likely either received and held on to their airdrops or diversified into secondary collections, which are more liquid, while maintaining conviction within the same ecosystem.

Top 3 Biggest Holdings

The top non-blue-chip collections held as the single largest position by Smart Money blue-chip NFT holders are similar to those when querying for the top 3. However, Async Art and Cool Cats replace PROOF Collective in the top 10 non-blue-chip collections in this query.

Key Takeaways

• The data suggest that, in general, this cohort is betting on CryptoPunks to be a better investment than Bored Ape Yacht Club. CryptoPunks have the highest Smart Money blue-chip NFT holder representation relative to the collection size and have the highest proportion of these addresses holding it as their most considerable investment, as well as in the top 3 holdings.
• Approximately 20% of addresses in this dataset have either Azuki or CloneX as their largest holding, exhibiting their long-term confidence in the projects even though they have lower market capitalization compared to other projects like Mutant Ape Yacht Club and Otherdeed.
• While Chromie Squiggles have the second-highest Smart Money blue-chip NFT holder allocation relative to the supply at 10.52%, the top 5 addresses within this cohort alone own over 60% of the allotment. The low percentage of addresses with Chromie Squiggles as their largest holding further supports the claim that the conviction in the project is not commonly shared throughout the entities in the dataset.
• Most of the top non-blue-chip collections held by Smart Money Blue-chip NFT holders are secondary projects of the corresponding blue-chips. This could be interpreted as diversifying into more liquid counterparts while maintaining conviction to the same ecosystem or receiving these collections as airdrop and holding on to them for exposure.