News

Why Metaverse Tokens Are Getting Hammered in Crypto’s Market Sell-Off

0

Metaverse and gaming-related tokens have suffered steep losses during a time when the broader crypto market is fighting through a weekend sell-off.

Decentraland (MANA), the top-ranking metaverse asset according to Messari, is down 25% in the last seven days. MANA reached a market capitalization of $10 billion on Nov. 25 but now sits at $6.63 billion.

MANA’s drop is followed closely by AXS, one of the tokens in the leading play-to-earn game Axie Infinity, which is down 23% in the last seven days. The AXS market cap is currently $6.21 billion but reached a high of $9.77 billion on Nov. 7, according to CoinMarketCap.

“It is no surprise that gaming/metaverse tokens got hit the hardest after the recent hype,” said Luas Outumuro, head of research at IntoTheBlock. Outumuro said that these tokens are extremely speculative bets, which is evidenced by the high concentration of short-term traders.

He said this previously occurred with shiba inu (SHIB), the self-proclaimed dogecoin killer, which had a high concentration of short-term traders too – a strong indication of coins riding hype cycles.

Research from IntoTheBlock shows that metaverse tokens such as MANA have a high percentage of holders that bought within the past 30 days (32%), while such traders make up less than 10% for both BTC and ETH at the moment.

Outpacing broader sell-off

Bitcoin, the world’s largest cryptocurrency, is down 15% in the last seven days. Bitcoin experienced a crash on Saturday, which saw the price fall as low as $42,400 on some exchanges.

SAND, the native cryptocurrency of the blockchain-based virtual world The Sandbox, is down 25% in the last seven days, mirroring MANA’s dip over the same timespan.

Matthew Dibb, Stack Funds’ chief operating officer and co-founder, said that while the future of metaverse and gaming tokens looks bright, there is very little real adoption in the present.

“Most of the price appreciation was made up of future expected value rather than present valuation metrics,” said Dibb. “Adding fuel to the fire, there have been some large unlocks of early investors that have chosen to liquidate since the crash.”

Index Coop’s Metaverse Index, which tracks crypto assets and protocols building out virtual worlds, is down 8.7% on the day.

DISCLOSURE

Lyllah Ledesma is a reporter on CoinDesk’s Markets team. She holds bitcoin, ethereum, and small amounts of other crypto assets.

Here’s why analysts expect ‘choppy’ Bitcoin price action between $42K and $53K

Previous article

A16z Leads $36M Bet on Web 3 Startup From Facebook Crypto Vets

Next article

You may also like

Comments

Comments are closed.

More in News