The Top NFT Artists to Invest In Right Now, in 2022, From CryptoPunks to Up-and-Comers

There’s a Pablo Picasso story where he doodles on a napkin and offers to sell it to a fan for one million francs. The lady was shocked, and obviously didn’t have that kind of money. Well, if Picasso was alive today, he’d just turn that doodle into an NFT and sell it for a couple million instead.

Welcome to the eye-popping world of NFT art. While the market’s still relatively small, the $50 billion traditional art market should give you an idea of its growth potential.  To really drive this point home, NFT collectables did around $1 billion in transaction volume in August 2021 alone.

However, NFT prices go up and down based on current events and popular tastes. Earlier this year, NFT sales volume plummeted due to concerns over the environmental impact of Ethereum (the most popular NFT protocol). 

But while some crypto markets like Gaming and DeFi lost up to 90% of their value, collectibles only shrunk by about 35%. This reinforces the idea that NFT art could act as a hedge against market crashes.

So what’s with all the hoopla? Is investing in NFTs worth it? And how do you find the top NFT artists to invest in?

These days, crypto markets have climbed back to their previous highs—with NFT collectibles even soaring past that. Here are some of the hottest trends in NFTs and the artists fueling the craze.

1. Digital Antiques

These are mostly collections created back in the early days of NFTs (around 2017) that have retained their value. And the CryptoPunks collection by Larva Labs, available on OpenSea, is the biggest name in this space.

Initially costing just a few dollars, CryptoPunks go for millions nowadays — with a Covid Alien CryptoPunk selling for $11.7 million this past June. 

You don’t have to wait years to snag up a digital antique, either. But it does require a bit of foresight to spot one:

• The first or early NFTs in a new category: For example, electronic producer 3LAU’s Ultraviolet was the first ever NFT album re-release. 
• Cultural history turned into NFTs: For example, Edward Snowden’s Stay Free, an artwork featuring NSA mass surveillance court documents with his portrait overlaid.

2. Tokenized Physical Art

FEWOCiOUS is perhaps the youngest artist leading the NFT revolution, with $27 million worth of art sold. Some of their top pieces are physical artworks paired with NFTs, like Nice to meet you, I’m Mr. MiSUNDERSTOOD (sold for $2.8 million through Sotheby's). But do these artworks do well over time?

While it’s harder to track secondary sales of physical art, SuperRare shows that FEWOCiOUS’ digital pieces have been resold at premiums of up to 7,541%.

Other high-selling physical artworks paired with NFTs include:

• Robert Alice’s Block 21: Sold for $131K.
• Trevor Jones’ THE ARCHITECT - SATOSHI NAKAMOTO: Sold for $50K.

3. Generative Art

Generative art projects are one-of-a-kind artworks produced by algorithms. Art Blocks is a platform that lets users generate these pieces in whatever style they like—for example: static images, 3D models or interactive media. So rather than representing one artist, Art Blocks is a collection of artworks by different artists with their own styles.

Art Blocks has done over $1 billion in sales since their launch in November 2020. Their best-selling NFT so far, dino pals #41, was minted for about $3K in May 2021, and sold for $1.16 million in August.

Art Blocks also allows certain artists to create "official" curated collections, like Piter Pasma’s Skulptuur, which has done $30 million in sales this month alone.

Other interesting generative art projects outside of Art Blocks include:

• Mad Dog Jones’ The Replicator: Sold for $4.1 million, this piece generates new NFTs every 28 days until it reaches up to 220 unique pieces.
• Pak’s The Switch: Sold for $1.4 million, the owner of this piece is able to trigger it to "switch" to an entirely new artwork, but this change will be irreversible.

In a way, NFT investing isn't so different from investing in art—the trends simply move a lot faster. Since we’re focusing on NFT art here, it stands to reason that we should evaluate these potential investments like a collector would. Here are some factors to consider.

Artist

The artist’s reputation will determine the riskiness of your investment. 

• Well-known: High initial price, lower risk.
• Up-and-coming: Medium-to-high initial price, medium risk.
• Unknown artist: Lower initial price, high risk. 

And while some artists can rake in millions from behind their computer screens without any prior fame, artists that were already successful before NFTs (in terms of sales, exhibitions, awards etc) are a safer bet. José Delbo, for example, is an established comic book artist who transitioned to NFTs (in his late 80s, mind you).

Besides that, how often does the artist put out a collection? All things being equal, the smaller their output, the more valuable each piece will be.

Artwork

A piece will sell for more if there’s a good story behind it. This is why an artist’s early works are more valuable, since they tell the story of their come up. Additionally, playing an important role in art history also acts as a price booster. Just think of the recent $1.4 million sale of Kevin McCoy’s Quantum, the first ever NFT in history. Now that’s a fantastic story. 

Additionally, some artists go through phases where they experiment with different styles. In such a case, works that are part of their signature style will command higher prices. Trevor Andrew, for instance, is best known for creating Gucci Ghost NFTs. So if Trevor decides to branch out, it’s safe to assume that Gucci Ghosts will still be the most valuable pieces in his oeuvre.

Market supply and demand

Demand is mostly estimated by looking at how many buyers wanted similar artworks and how much they were willing to pay. You can easily find this data on platforms like OpenSea and Rarible. This approach, however, has a few pitfalls:

• Comparables need to be more recent to ensure you’re not basing your estimates on old market data.
• Some artworks don’t have any comparables so you can’t make an educated guess.

Scarcity also plays a role here. With traditional art, you have to determine if the work is one-of-a-kind. But with NFT’s, limited supply is baked into the code itself. Don Diablo’s Destination Hexagonia, for example, is an audiovisual NFT project that comes with the only copy of his concert film. However, some creators churn out hundreds of NFTs in a series while others only create a small handful.

Pricing and liquidity

Artworks are among the most illiquid assets in the world. And the higher the NFT price, the smaller the pool of potential buyers (i.e. more illiquid).

Given the illiquidity of NFTs, buying at too high a price could mean certain loss. One common strategy is to only buy NFTs at their launch price. This way, you can get all the upside potential while minimizing your downside.

It depends. NFTs are still a new investment, so there’s no time-tested strategy for success like there are with established assets like stocks. Here are some of the risks involved.

High prices

The average NFT price has been steadily increasing over time. According to BlockCrypto, the average price of NFT art and collectibles is currently $116K. So it pays to get in early.

Arbitrary valuations

NFTs prices aren’t automatically calculated in real-time based on supply and demand. So, what an NFT is worth (or whether it’s worth anything at all) is anybody’s guess.

Illiquidity risk

If you pick the wrong project or find yourself in a down market, you might not be able to sell off your NFTs.

High volatility

While traditional art is one of the less volatile asset classes, NFT art can experience daily price swings. And not just due to supply and demand. Ethereum-based NFTs, for example, fluctuate in price based on the value of Ether (ETH).

Hidden fees

Creating, buying and selling NFTs incur fees, which can be high or low depending on the blockchain they’re running on. Ethereum gas fees are notorious for spiking during times of high demand. Solana, on the other hand, is a competing blockchain with one of the lowest fees in the industry. Also, don’t forget that NFT marketplaces like OpenSea take a cut of each sale (2.5% in this case).

NFT investors can generate insane returns from buying a JPEG, so it’s easy to see the appeal. If you do decide to hop aboard the NFT rocketship, stick to these rules to stay safe:

1. Make NFTs a small part of your portfolio (definitely less than 5%), only investing what you’re willing to lose.
2. Buy NFTs you can easily afford, so you’re able to at least break even or not lose much if the market tanks.
3. Buy art that you actually like, which will make it easier for you to decide what it’s worth.
4. Invest in well-known artists, rather than those without a track record.
5. Do like art collector Kim Camacho: “When the market values it more than I do, I let it go, when I value a piece more than the market does, I buy.” 

To sum it all up, if you’ve got time to do the research, cash to spare and know how to manage risk, then you might just make a buck with this NFT thing after all.