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Although Web3's total sales dropped significantly a couple of days ago, different investors from everywhere are still bombarding the platform. The total market cap of NFTs increased to over $19.4 billion in May 2022, with over $1.2 billion in NFTs traded in recent time. People are also quick to question a project’s viability. As a result, NFT investors carry out their research based on the roadmaps, projections, and announcements that the team shares. Notable projects and NFTs with blue-chip status, such as Axie Infinity, Bored Ape Yacht Club (BAYC), and Cool Cats' Cool Pets, strayed from their intended path, making their users unhappy. Although the Bored Ape Yacht Club (BAYC) strategy was successful, investors should be aware that investing in a company based on the promise of a track record can lead to disappointment. 
The Unpredictability of Growing Pains
It's thrilling to come across a project that appears to be top-notch. There is a possibility that the project meets all requirements, and the team proves that they built a functional product. A strong community will cause every member to believe in the project, especially if it has a good track record. As a result, investors will be confident they have found a project into which they can pour their investment. However, none of these is sure paths to success. Understanding the difference between "good" and "bad" problems is essential because unanticipated events that cause logistical issues are the worst obstacle to a project's success. Accelerating growth, for example, can make it difficult for a project to expand, but it serves a purpose. Axie Infinity recently closed the Ronin Bridge, which transfers funds to the Ethereum mainnet. Unfortunately, they also froze Investors' funds due to this unexpected occurrence, and the value of their tokens dropped drastically.
Impact of Market Cycle On Investors' Morale
Accelerating growth can be harmful to a project because it allows different options and opinions available. As the number of project users grows, the number of opinions about what is best for the community and the project's long-term progress. As a result, rumours and expectations will start to form and grow. The Yuga Labs Otherdeed NFTs are the most anticipated in 2022, with a value greater than $110,880. They derive most of these values from the distribution of rare Koda NFTs at random across Otherdeed territory. OpenSea accepted APE as payment for future listings because they originally priced the mint in ApeCoin. Other deeds had an average price of $25,629 before dropping to $15,510, matching the price of APE.
Result Of The Combo
The crypto market's decline is bad news for NFT investors. Some investors spent more on margin calls and liquidations than they could afford, forcing them to sell assets at a loss to cover margin calls. Others argue that the drop is due to small investors' concerns about rising interest rates in the United States. NFT traders deal with market cycles never seen before in terms of all-time highs and massive volume. They test the popular NFT investor mantra WAGMI (we're all going to get there). The fact that new investors are being born today benefits the current era. More experienced investors see market declines as an opportunity to "stack and survive" or build their portfolios to new all-time highs.
The Role of Whipsaw in Investing
Whipsaw occurs when too many people buy or sell a stock simultaneously. For example, trend traders buy rising stocks and sell falling stocks. These stocks can become "overheated" if there are too many trades. In this situation, most investors would prefer to buy stocks that have traded more than their true value. Overbought stocks may experience a whipsaw because the further they deviate from their true value, the fewer investors are interested in buying or selling them. A whipsaw occurs when there are insufficient resources on the market. This eventually leads to traders taking all of their profits at once.
How to Understand the "Whipsaw Effect"?
To know the whipsaw effect, look for a price swing in the opposite direction of the trend. It's difficult to predict whether or not this will occur, but you can take some measures. Before you open a position, use technical and fundamental analysis to determine whether an asset is currently overbought or oversold. Overbought assets' prices can fall, while oversold assets' prices can rise. When you buy in excess, long positions may oscillate. A whipsaw can occur if security is oversold when going short.