NFTs are speculative assets that are more on the risky end of the spectrum. And they have fetched astonishing amounts on the market. From Yuga Labs’ Bored Ape Yacht Club to Chiru Labs’ Azuki, a dozen NFT collections generated a total of $400 million in sales. Even after the market crash in May 2022, the floor price of the top collections remained at around 70 ETH.

New traders are looking for the next hit collection. This is where the “Sweep the Floor” NFT trading strategy comes into play.

What is a minimum price?

The minimum price of Azuki. Source: OpenSea

The reserve price is the fundamental metric in the NFT market. The NFT market behaves similarly to the commodity market, with one major difference: it is decentralized. Price determination in the NFT market happens organically. As the project gains public acceptance, more people rush to buy items from an NFT collection, which usually consists of 10,000 NFTs. And the more they buy, the more the reserve price increases.

This is the floor price for NFTs; the lowest available price at which someone is willing to sell an NFT. Considering that NFT marketplaces are open 24/7, this means that the floor price for a given project can quickly rise.

What influences the NFT minimum price?

Although these floor prices do not occur often, they can easily be triggered by celebrity adoption or partnership announcement. If we look at the floor price of Meebits on March 12th, the floor price increased by 45% to 6.1 ETH.

Minimum price of Meebits (in ETH) in 2022, boosted in particular by Yuga Labs on March 12. Source: nftpricefloor.com

Why did this surge occur on this day? Because Yuga Labs, the creator of the super-popular Bored Ape Yacht Club, announced that it acquired both CryptoPunks and Meebits, both of which were owned by Larva Labs. That would be like Nike announcing that they bought Adidas. The valuations of all collections would inevitably skyrocket.

Trading volume shows how much interest there is in the NFT collection. Like the reserve price, trading volume is also boosted by various social media/collaboration events. For example, when SnoopDogg and Eminem made a BAYC-themed music video together, they sparked market interest and speculation, which affected trading volume.

High volume indicates high liquidity, which in turn indicates that there are more potential traders willing to buy or sell NFTs at certain price levels.

Sweeping the floor = FOMOing

The NFT market is all about picking the next blue-chip NFT when there isn’t one yet. Let’s remember that on August 18, 2021, the BAYC floor price was 15 ETH. On August 7, it was 81.8 ETH.

Minimum price of the Bored Ape Yacht Club (BAYC). Source: CoinGecko

This means that forward-thinking BAYC buyers could have sold their NFTs a year later for a 445% gain. Not bad for a speculative asset. Such performances generate a lot of FOMO in the market – the fear of missing out. So collectors are constantly on the lookout for the next hit. This is where the sweep-the-floor trading strategy comes into play.

NFT Floor Sweeping Explained

Buyers don’t have to buy just one NFT at a time – they can buy all listed NFTs at the reserve price. They can sweep the floor. This would require the buyer to follow the project closely before it is minted and released for public trading.

This is the purpose of NFT calendars that track upcoming mintings. Additionally, NFT issuers promote their projects on social media, usually Twitter and Discord, to mobilize the FOMO troops.

One of the most recent upstarts in this FOMO arena was Goblintown. Without a doubt, Goblintown was one of the few generative 10,000 NFT collections that look like each NFT was individually handcrafted.

Source: goblintown.wtf

Likewise, the website goblintown.wtf itself was created with both technical and artistic expertise. This combination caused quite a stir that it could be another BAYC. And that’s exactly what happened for a while. Between May 25 and June 2, Goblintown’s reserve price shot up 1,189%.

In such cases, when FOMO is more evident than usual among blue chips, floor sweepers use search bots to buy all available NFTs.

With a successful sweep-the-floor strategy, NFT traders can make juicy profits. But the risk is enormous: If a trader does everything at once and then cannot sell the NFTs, they are left with potentially worthless digital assets.

Other benefits of sweeping floors

NFT floor sweepers can not only achieve huge flipping potential but also save on gas fees. When transactions are bundled, they are counted as individual transactions. Likewise, bulk purchasing NFTs by sweeping the floor can save up to 40% on gas fees.

However, this is only true when using specialized aggregator services like gem.xyz. The opposite is true for regular floor sweepers who trade manually. Since multiple transactions need to be executed, they drive up gas costs.

Likewise, the manual approach slows down transactions, leaving a trader in a race with others who have the same idea. This is why NFT floor sweepers tend to use automated sniper bots that look for NFT collections in pre-mint states. Each bot would need to be customized for a specific blockchain network, such as this floor price bot for Solana.

NFT floor sweepers are nothing more than classic concert ticket scalpers. Applied to the digital asset space, they use more sophisticated tools rather than simply standing on the street corner. However, given the stiff competition and potential profits from finding the next blue-chip NFT, all means are permitted in NFT trade wars.

Series Disclaimer:

This article is intended only as a general guide and information for beginners working with cryptocurrencies and DeFi. The content of this article is not intended to be legal, business, investment, or tax advice. You should consult your advisors for all legal, business, investment, and tax implications and advice. The Defiant is not responsible for any lost funds. Please use your best judgment and do your due diligence before interacting with smart contracts.