Flipping Meaning
What Is Flipping in Crypto?
Flipping is a popular investment strategy in real estate or share markets. It involves purchasing something with the goal of quickly reselling it for profit. Similarly, flipping crypto refers to buying a coin or token at a lower price to sell it later at a higher price.
It often occurs during ICOs or IEOs, where a market participant purchases the token before it is listed on cryptocurrency exchanges. The market participant “flips” the token for a profit immediately after they start trading on secondary marketplaces. This is because crypto tokens are likely to increase in price after ICOs.
In the context of Bitcoin flipping, the market participant buys a certain amount of Bitcoin at a lower price and shortly resells it at a higher price. This is especially common during high volatility and extreme price spikes.
How to flip NFTs
This practice is also common in NFT marketplaces, where investors mint or purchase NFTs when they are cheap in the early stages of the project. The investors resell them on secondary marketplaces when their prices increase.
Flipping NFTs involves methods such as:
- Floor price method – Investors can flip NFTs by taking advantage of their floor price, which involves finding low-priced NFTs and selling them for more.
- Sold-out NFT flipping – Involves minting NFTs from projects with only a few tokens left for the minting. The investors then list the NFTs on secondary marketplaces at the floor price – typically higher than the minting price.
What are the risks of flipping?
The cryptocurrency market is known for its unpredictability and extreme volatility. Such factors risk market participants losing their capital when the market moves against them. The lack of regulation also subjects flipping crypto to market manipulation, scams, and fraudulent activities. In addition, flipping crypto in low-liquidity markets makes it difficult for investors to cash out.
