Metaverse And Play-to-Earn Peter Out: From $16 Billion Boom to Cryptocurrency Bust

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In the height of 2021, the cryptocurrency landscape echoed with words like “Metaverse,” “GameFi,” and “Play-to-Earn.” Fast forward to 2023, and most of those lured by the metaverse allure are left picking up the pieces.

Key Players of the 2021 Metaverse and P2E Surge 

Among the significant influencers in 2021’s crypto realm were The Sandbox (SAND), Axie Infinity (AXS), Enjin Coin (ENJ), and Decentraland (MANA). These “Big Four” collectively accounted for a whopping $16 billion in market capitalization, making up 0.5% of the global $3 trillion crypto market cap.

Yet, with the onset of the crypto winter, doubts arose. The metaverse universe faced scrutiny from security concerns to community governance, diminishing the appeal for long-term investments.

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By September 2023, a mere two years later, the combined value of SAND, AXS, ENJ, and MANA plummeted to $1.23 billion, marking a steep 92% decline. Their global crypto market dominance also waned at a scanty 0.12%.

By examining the combined market cap of the Big Four, one can gauge the metaverse sector’s significance in the broader crypto realm. The recent trends suggest an ebbing interest in the metaverse, with investors shifting focus towards more stable sectors and emerging trends.

An Analysis of Losses

Data from IntoTheBlock’s Historical In/Out of the Money (IOMAP) paints a bleak picture. This data, comparing current prices to the average token acquisition cost, reveals that most ENJ, MANA, AXS, and SAND holders are at a deficit.

Digging deeper, Axie Infinity and The Sandbox are bearing the brunt. Axie Infinity, once celebrated for its bustling in-game economy, reveals that 99.54% of AXS token holders are currently “out of the money.”

Similarly, The Sandbox, a virtual playground for gamers, shows that 98.34% of its investors are underwater. Decentraland and Enjin Coin, although less affected, still have a significant portion of investors in the negative.

A Glimmer of Hope? 

July 2023 saw a ray of hope with Apple’s Vision Pro debut and positive statements from Meta’s CEO, Mark Zuckerberg, hinting at a potential metaverse rebound. However, the momentum appears fleeting. Persistent concerns over security, utility, and player retention remain barriers. Adding to the storm, the U.S. Securities and Exchange Commission (SEC) made a pivotal move in June 2023, labeling The Sandbox, Axie Infinity, and Decentraland as “securities” in lawsuits against Binance and Coinbase.

The meteoric rise and subsequent decline of the metaverse sector within the crypto market serve as a testament to the volatile nature of investments. With a shift in investor focus and regulatory challenges, the future of the metaverse remains a topic of intense speculation.

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