Not Fun Trading: I’m trying NBA Top Shot (update: I’m not trying anymore)

Disclaimer: This piece is pretty long. I learned some things in the 48 hours after writing it (and then some more several months later) that made me add a section to the bottom that makes it a bit more definitive in its negativity, but I think it’s still worth reading through, top to bottom, to see the pros and cons of this Top Shot concept. I decided to leave the post up in its entirety, rather than edit it or rewrite it, as a snapshot of this moment in time in a weird collecting space.

I’ve said before that I come at sports card collecting as mostly a collector — I’m an appreciator of the art of sports cards and a fan of lots of players — and a little bit with an eye toward investing. As such, I’m not exactly turning over a lot of profit as a sports card collector. I’m plowing my “allowance” into cards that, as of yet, haven’t appreciated much because, as it turns out, the cards that appreciate the most are the ones that already cost the most right out of the pack (due to rarity and demand, etc.) and while the value of most cards are still on an upward slant during this hot market period, for most of the cards I can afford, the upward swing is pretty subtle. None of the cards I’ve purchased since starting last fall have increased in value enough for me to consider “cashing out” on them. To reiterate, I’m not really as much of an investor on that front.

When I started hearing about this new digital “card” collecting and trading site called NBA Top Shot a few months ago, I dismissed it almost immediately. I saw that there were some eye-popping prices being tossed around for these so-called “moments,” but hearing that it was based on a blockchain-type system like cryptocurrency is, I more or less consigned it to “fad” status in my brain. Plus, the packs I was seeing were like $30+ and I just couldn’t imagine spending that much on fake digital crypto cards.

But then a funny thing happened. I kept reading about it and hearing about it, and a couple of the guys on my favorite NBA podcast, No Dunks, had a few Top Shot moments between them and were having fun talking about them. So I decided I was going to create an account, just to see what it was about from the inside, and then I’d be able to buy a pack or some moments if I felt it was worthwhile.

What REALLY changed my mind? On one episode of No Dunks, the guys opened up packs that cost them each about $14. None of the players seemed that mind-blowingly great, but I went to check the prices on the key moments they’d unearthed a couple days later and noticed that one of them (a DeMarcus Cousins Cool Cats moment) was selling for $800. It wasn’t even particularly rare!

And because I really, genuinely, supremely don’t care about “owning” digital cards, I decided I’d like to approach Top Shot from a purely investment angle and see if I could make a few hundred bucks quickly, offset some of the less profitable spending I’m doing on my main collecting hobby. To mangle a popular phrase, I’m here for a profitable time, not a long time. (Maybe.)

I’ve been on the inside for a couple of months. I purchased my first pack for $9, then got in on another pack drop for $14, then got in on another $9 drop. I also purchased a handful of low-value moments on a speculative basis. All told, I’ve spent about $70 on Top Shot since I started, and so far I’ve “made” more than $370 selling moments. I still have 10 moments, plus another $9 pack on pre-order as of this morning. I’ve learned a lot, and I thought I’d share what I’ve noticed that makes me kinda hate this app, but also keeps me more engaged than I’d like to admit.

Top Shot is an NFT market, and it is bad for the environment

A lot of ink has been spilled (and pixels have been darkened) on the massive amounts of energy that go into cryptocurrency and related products such as NFTs — non fungible tokens. It all takes a lot of computers working very hard in hot rooms with air conditioners and fans also working very hard, and therefore, whatever is being burned or churned to produce that electricity (usually a mix of coal and hydroelectric and nuclear with a smattering of solar and wind) is being burned or churned at a rate comparable to what’s needed to fuel whole cities.

Top Shot isn’t the biggest NFT market out there, but it is still an NFT market, and though it’s not on the popular Ethereum blockchain like most NFTs are, it is still on a blockchain, which requires computers working very hard, etc. All this to say, there’s definitely some ecologically unethical consumption going on here, and I’m now a part of it. I can’t defend it, all I can do is put it out there, and note that I am also aware of it. I’ll also note that I recognize the ridiculousness of NFTs in general, and I likely wouldn’t have even tried this if it hadn’t been sports-related (I haven’t dipped into any of the other NFT sites selling music or pictures of Batman or pixel art faces, etc., and I don’t have even the slightest desire to).

NFTs are honestly super stupid (but what if they aren’t?)

This whole thing really feels a lot to me like the early days of crypto, when I did research on this new thing called Bitcoin, decided it was stupid, didn’t even toss a few dollars at it, then watched as the dumb thing went nuts over the next decade-plus. The idea of NFTs, it’s honestly so dumb. Like, I GET how it works, I GET the whole chain of ownership concept, the scarcity of it, why having an NFT is “different” than having a normal GIF or JPG file, etc. etc., just like I GOT how Bitcoin was generated by computers solving math problems. It feels just as pointless, ethereal, and needless as the whole crypto thing, and yet: Crypto is STILL a thing, in fact it’s more of a thing than it’s ever been. And all the same people — honestly, the same annoying, overeager, ridiculous people — who stumped for crypto all this time are also stumping for NFTs (and investing their own wealth into them). And given that Top Shot has the backing of the NBA itself makes this particular marketplace feel … “safer?” Is that the right word? And given that I’ve only put in less than $100 on this thing, if it all goes tits up tomorrow, it’s not like I’ve lost my shirt. I am treating it essentially like gambling, and not putting in any amount that I would feel uncomfortable losing.

So what if I hold on to my “common” moments that are only going for $10 right now for a couple years and I find out that, as “retired,” limited edition pieces in a still-thriving market, they’re going for several hundred or several thousand dollars? What if, as my wife of all people suggested, I get in on the next “rare” pack drop that costs $100 or more, since those packs have historically guaranteed at least one moment worth $1,000 or so right out of the gate? What if, as has seemed to be the case since the start of March, practically all the moments that aren’t part of the current season continue to slowly lose value?

I legitimately, truly don’t know, man. It’s kinda stressful, to the point that I’m glad I’m not very invested in this, because it’s very stupid, and it still feels like it could all come crashing down to near worthlessness at any point in the next few weeks at any given time. How greedy do I feel like being? How long do I want to ride this weird-ass wave?

It’s still in beta

It doesn’t feel like it’s still “early” in Top Shot now that more than half a million jamokes like me have accounts and are playing in this weird digital bullshit sandbox, but it definitely is still a young platform. It’s still in beta, it still routinely locks down new registrations (much to the chagrin of hundreds of would-be Top Shot jamokes on Twitter every time it happens), still routinely shuts down the marketplace for maintenance (much to the chagrin of thousands of current Top Shot jamokes trying to ride the micro-waves of market volatility for profit), still routinely has issues with sign-ins and purchase queues and withdrawing money (currently the main ways to get your money out of the system are to exchange it for crypto — barf — or pay $25 to request a freakin’ wire transfer that will then take several weeks to clear), etc. That last bit is perhaps the biggest reason why, having started this experiment, I haven’t yet cut bait and run. They have my money for the foreseeable future, so I might as well see if I can squeeze a bit more juice out of my little collection, right?

Like sports cards (and anything else, really), it’s only the top collectors who get the real juice

Top Shot is a LITTLE more democratic than sports card collecting in that the last several pack drops have been limited to one per account, so even the biggest “whales” out there can’t just scoop up hundreds of packs like they would with real sports cards (though there is still a problem with people having multiple fake accounts to get multiple packs, but the Top Shot people have been implementing measures piecemeal for a while now to combat that). This means that if there’s a rare moment out there in a $9 pack, someone who is just starting out could pull it like Charlie Bucket nabbing a golden ticket, and become an instant thousandaire, just on that single $9 investment.

But in reality, it’s the guys with the money (and it’s mostly guys, just being honest) who reap the most rewards. The guys who have the money to spend $1,000 a pop on a handful of limited edition moments now, sit on them for a few months until they’re no longer available anywhere else, and then put them up for sale for 10 times that much are the ones driving the headlines about how “hot” the markets are. My most successful “investment” so far has been purchasing Orlando Magic rookie guard Cole Anthony’s first moment for $19, and seeing it climb as high as $50 on the lowest ask. That’s a decent “ROI,” if you will, but it’s ultimately pocket change.

Like the sports card industry, you are kind of stuck getting what you put into it. Looking at the listings of top accounts as of this writing, you won’t find anyone in the top 20 in portfolio value who has put less than $20,000 into their collections. There are two exceptions as of the time of this writing, both of which have spent less than $4,000 and yet have collections valued in the millions. The very top account, WhaleVault1, has spent less than $3,500 on a collection of nearly 10,000 moments valued at more than $42 million. My guess: This is not only a very early adopter, but someone who has/had dozens if not hundreds of fake accounts they used to purchase extra packs and feed all the moments to their main account. To say they’re an outlier is an understatement.

The market is dumb volatile

Now that I’ve sold off my “big” moments (a pair that went for $120 a piece), I have a handful of moments valued between $6 and $50ish at any given time. That Cole Anthony is one I would predict will continue to climb over time, because it’s a rookie “card,” and rookies are always better business in collecting. But even that one fluctuates more than $20 in value from day to day for no apparent reason. The others I have, there was one day last week when they were all hovering around $20, like that was the market floor at that time. Today, as I write this, those same moments are around $7 to $9.

Why? I really have no idea. They’ve tended to be around $10 to $13 most of the time. One of the moments I sold for $120 had spent some time around $180, and I’d assumed, based on some comparable moments (ones that were involved in the same collector “challenge,” in which collectors need to own one of each moment in a subset to earn a super rare moment), that it should eventually go back toward $200 or so. It only went down in value, even as the challenge window drew to a close, and I’m glad I was able to sell when I did, because it’s now less than $60, and likely to fall even further with no compelling reason for anyone to own it. (It would be kind of typical of how these markets operate if someone reading this post several months from now clicks that link and sees it’s going for $200-plus)

That right there, the challenges thing, that’s one of the only finger holds I have on any logic as far as this market is concerned. Rare = good, challenges usually mean higher prices for involved moments, rookies are better than non-rookies, and that’s about all I know. There’s now a cottage industry of dudes (and a few ladies) on Twitch and YouTube doing daily market updates, and they’re mostly all talking out of their ass, as far as I can tell. Nothing against them, per se; they’re trying to make sense of a fairly nonsensical thing, but I haven’t found one that has consistently been correct or accurate in their strategies.

But this volatility makes it stressful, as I said before, to own moments. When do you buy? When do you sell? Do you need to be glued to all day to learn the undulations of the market, or can you just wing it? If I don’t unload this very unpopular, perpetually low-priced moment now, will I be stuck with the Top Shot equivalent of a penny stock forever? If I don’t sell this moment that’s part of an upcoming challenge at the right time, will I miss out on several hundred dollars in profit? There are days when all of this speculation feels a bit more fun, and days when all the speculation feels a bit more heavy. I guess it depends on your personality, in the end.

I wouldn’t recommend this — to most people

Sometimes I try to think about what Top Shot is BETTER than, when it comes to things sports fans can do with their money. I would say it’s definitely better than actual gambling, at least at this point, in March 2021. If you can get in on pack releases, you’re pretty much guaranteed an opportunity to at least double that investment, even with the worst pack luck. Even at the pocket change level, there’s no gambling platform I know of that can guarantee that. That said, until they figure out ACH withdrawals, or a PayPal integration, or something, your money is as trapped in the Top Shot platform as it is in most gambling platforms.

I would say it’s probably better, from a pure return on investment standpoint, than even regular sports cards are right now. If you JUST want to make money, and have no attachment to the cards, you can probably do a bit better flipping Top Shot than you can flipping sports cards, at least in the near term.

But in terms of just being a normal person, a normal sports fan, maybe someone with a proclivity for minor collecting, I don’t think I can recommend it. It’s weird! It’s got an overall very cynical fan base (some exceptions out there, of course). It’s kinda risky. It’s pretty frustrating, especially if you’re just starting out and you aren’t lucky enough to draw a high enough number to purchase a pack the first few drops, so you’re just sitting there, on the outside looking in on the actual collecting piece.

And what does it really mean to “collect” NFTs? What enjoyment do you get out of owning the unique 2,654th copy of, essentially, a short video clip of a basketball player doing a cool thing? I suppose you could ask the same question about sports cards themselves, but at least sports cards have a pretty sturdy market of collectors stretching back more than 70 years at this point, and it’s stuff you can hand down to your kids or put on a shelf to admire or sell at a show or a local shop, whereas your NFT moments are just … online, and you can only sell them in Top Shot (you can try to buy and sell them on eBay, but WOOF that’s a whole other level of pain with scammers and fakers).

Essentially, if you’re an inveterate gambler, I’d clap you on the shoulder in a friendly sort of way and suggest you move some of your gambling dollars to a Top Shot habit for a while. If you’re an inveterate card flipper, I’d give you a knowing nod and suggest you divert a little of your flipping money to Top Shot, at least for a while. If you’re neither of these things, honestly, I don’t recommend this hobby. At all.

That said, if Top Shot continues to grow like it has been, or takes the Bitcoin trajectory over the next few years, this will be pretty bad advice from a financial standpoint. If you’re not upset you missed out on Bitcoin’s rise, I think you can sleep easy without opening a Top Shot account of your own.

Update: Literally two days later (April 1)

With the release of the latest Series 2 pre-order pack (and TWO more drops happening today, an unheard-of amount of new common packs at once), it would appear the Top Shot market is, uh, forming a bottom. I think we’re hitting the saturation point, where, unlike with Bitcoin, where it’s just *Bitcoin* and people who want in want *Bitcoin*, we have more than half a million users and millions of moments now, and everyone who wants, say, a Series 2 moment of Julius Randle doing a layup HAS that moment, and/or isn’t willing to pay more than a few bucks for it. It’s like if there were several thousand different kinds of Bitcoin (and there sort of are, if you think about all the failed crypto competitors who have “currencies” worth pennies now).

I’m not saying the whole thing is crashing down, just that Top Shot is maturing from this wild, untamed, weird thing where even the “common” moments were fetching a couple hundred dollars to a more “typical” collectable market where the vast majority of the assets are more or less worthless (or at least low enough monetary value to make them no longer attractive as “investments”) and it’s only the rare pieces that actually move and shake the market. There’s just a lot of stuff out there now, and that’s not something they can undo. There are now 35,000-plus digital assets of Collin Sexton hitting a 3 in January 2021, and that’s not going to change.

And it’s not just the new, overproduced stuff that’s getting hit. I was looking more deeply at data on the “common” cards from Series 1, released last year when Top Shot was really, really new, and even the commons were more than 10 times more scarce than Series 2 commons, and I noticed a pretty steady trend since the start of March:

Price chart for a Series 1 moment of Suns role player Jae Crowder
Price chart for a Series 1 moment of Lakers star Anthony Davis
Price chart for a Series 1 moment of reigning MVP Giannis Antetokounmpo

Practically everything is around a third of the price it was a month ago. And as it turns out, the main reason the “WhaleVault1” account has such a large portfolio value is that it holds near monopolies on certain high dollar moments, and the listings for those moments are each set at a quarter million dollars a piece. That doesn’t mean the owner could GET a quarter million dollars for each of those moments if they cashed out, that’s just what the sticker price is right now.

The Top Shot powers that be may have been shooting for this all along. The market will become more accessible to beginning and casual collectors, but also retain some interest for the investor class with its more rare releases. It does beg the question: Is a system dominated by $2 to $5 digital highlight NFTs of role players on NBA teams any more viable than the system dominated by $1,000-plus moments? The $1,000-plus ones attract the gamblers and the flippers who have money burning a hole in their pocket in hopes of turning a profit. The $2 ones will only attract people who put actual value on “owning” the NFT in the first place. Which are there more of? I guess we’re about to find out.

So anyway, I’ve listed all my moments, which are all commons, for sale (and not for a quarter million dollars). I think I’m out. If more people get rich on this thing, so be it, but I’m betting I won’t be one of them.

Update: I’m all out (Oct. 25)

I come back to this post about seven months later to drop a couple of new pieces of information. First: I’ve successfully sold all my moments, and now have an empty portfolio and an empty “wallet” on Top Shot. After the wire transfer fee (which again, just: ugh), I walked away with about $425, which all in all isn’t a bad return on about $100 to $120 of spending (I admittedly lost track of what I actually spent, since I bought a few moments with the balance from the sales I’d made before, but I’m confident it wasn’t much more than $100 total). I didn’t get in on the dumb rich gold strike early days of Top Shot, but I still got out before the kind of respectable return I got became more or less impossible.

And those returns are becoming — if not impossible — certainly much less likely. Some of my predictions in the April 1 update appear to be coming in Season 3 of Top Shot. They will be making Season 3 moments so plentiful and common that there is a new “ticket exchange” feature where you can trade in moments for tickets, which you then can trade in for other moments. So you are cashing in your least valuable moments for pennies on the dollar in the hopes of pulling something better. But the real catch is that all those junky moments everyone trades in go into a virtual pool, and moments drawn with tickets are drawn from that pool. So it’s a little like fishing around in a communal toilet for better turds.

It used to be you could pretty much guarantee that, with a $9 spend on a base “pack” of three moments, even the “worst” pack would contain moments with market values totaling at least double that $9 investment. And again, that was the absolute worst you could do around February-March when I started, and that was why the fervor for new “drops” was so high. If you drew the right number and got in, you were guaranteed to make money. Obviously that’s not sustainable, and it’s very much no longer the case.

Unless you just really believe in NFTs, or you really like digital collecting (admittedly it is nice to be able to show off your collection on your phone), Top Shot is not worth taking a shot at (cue rimshot).

One thought on “Not Fun Trading: I’m trying NBA Top Shot (update: I’m not trying anymore)

  1. […] Here’s where the story could fork one way or another. A more optimistic person might say: Seeing how saturated the market is with graded cards, perhaps people will decide the value proposition isn’t there anymore, quit submitting in such high volume, and turn their focus back toward ungraded cards until there’s some sort of equilibrium. And to that I say: Probably not. I think it’s much more likely that a bunch of the jamokes submitting those 1990 Fleer Jordans to PSA this last year will be so downhearted about their poor return on investment that they’ll say “nuts to this” and quit entirely. Maybe they’ll try NFTs. […]


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