London: Global markets had a rocky start to the year as the prospect of tighter monetary policy prompted investors to ditch risky assets – but the rapidly growing world of ‘metaverse’ investing followed its own calendar.
Metaverse-related assets, such as currencies that can be used in virtual worlds and NFTs representing virtual lands, suffered only a slight hit as risk appetite fell in January, while the market broader digital goods sector has seen its volumes increase.
Facebook’s renaming to Meta Platforms Inc has proven to be a bigger driver of investment in the Metaverse than broader financial market conditions.
Non-fungible tokens (NFTs) have grown in popularity over the past year and that growth shows no signs of slowing down, with sales in the biggest market, OpenSea, hitting a record $5 billion in January even as the The tech-heavy Nasdaq posted its biggest monthly decline since 2018.
NFTs are a niche crypto asset that uses blockchain to record ownership of digital files such as images and videos. Some enthusiasts see them as part and parcel of a largely hypothetical version of the internet, called the “metaverse,” where property such as virtual land, clothing, and artwork could be held as crypto assets. .
A small number of enthusiasts drove the volume growth. Over the past month, there were around 400,000 active wallets in NFT markets on the Ethereum blockchain, according to market tracker NonFungible.com – and a person can own multiple wallets, making volume data an unreliable indicator of Requirement.
METAVERS TOKENS
As the prospect of a US Federal Reserve rate hike spooked investors in late January due to soaring inflation, bitcoin also fell – contrary to theory that the highly volatile cryptocurrency could act as a store of value, like gold.
Blockchain-based metaverse worlds such as The Sandbox and Decentraland have their own cryptocurrencies, which players can use to purchase assets such as land or “wearables” for their avatars.
Popular metaverse-related coins, “MANA” from Decentraland and “SAND” from The Sandbox, are highly volatile, but seem to be driven more by corporate sentiment surrounding the metaverse than by central banks.
Although they aligned with other risky assets, this move was small compared to the massive spike they saw in late 2021 after Facebook’s rebrand, sparking a new wave of interest in risk-related investments. metaverse.
Metaverse coins have seen astronomical growth during the pandemic: Axie Infinity’s ‘AXS’ coin grew by around 3,000% last year, to $61.03 from $1.97 at the same time l year, according to data from CoinGecko.
VIRTUAL REAL ESTATE
How much is a virtual land worth?
The price of an NFT representing a unit of land in blockchain-based virtual worlds also rose last year, with investors comparing the rush for well-placed land to the way people bought domain names in the early days. of internet.
Yet since late 2021, price growth has collapsed. The average price of land at Decentraland last week was $18,268, according to NonFungible.com, down from a peak of $21,405 in November last year.
“There are more virtual land buyers this year than in the past, but with high selling pressure with many overbuys last year, it’s difficult to sell at a profit in today’s market,” said a longtime NFT investor. known as Trislit, who estimates his virtual land portfolio is worth around $900,000.
The number of NFT land sales has fluctuated between around 1,000 and 2,000 per week so far this year.
“The fall in prices caused the liquidation value of my portfolio to drop quite significantly,” Trislit said. “But since I don’t plan to sell anytime soon, I haven’t personally felt the blow.”
