In the heyday of 2021, words like “Metaverse,” “GameFi,” and “Play-to-Earn” echoed in the cryptocurrency world. Fast forward to 2023, and most of those who have been charmed by the Metaverse’s charms will continue to pick up shards.
Key Players in 2021 Metaverse and P2E Explosion
Some of the key influencers in the cryptocurrency space in 2021 include The Sandbox (SAND), Axie Infinity (AXS), Enjin Coin (ENJ), and Decentraland (MANA). Together, these “Big 4” have a whopping $16 billion market cap, making him 0.5% of the $3 trillion global cryptocurrency market cap.
But as crypto winter began, questions arose. The metaverse universe has faced intense scrutiny, ranging from security concerns to community governance, making it less attractive for long-term investments.
By September 2023, just two years later, the combined value of SAND, AXS, ENJ and MANA plummeted to $1.23 billion, a 92% drop. Their dominance of the global cryptocurrency market has also weakened by just 0.12%.
By looking at the total market capitalization of the Big 4, we can assess the importance of the metaverse sector in the broader crypto space.Recent trend The waning interest in the metaverse suggests that investors are shifting their focus to more stable sectors and emerging trends.
IntoTheBlock’s Historical In/Out of the Money (IOMAP) data points to a bleak picture. Comparing current prices with average token acquisition costs, this data reveals that most ENJ, MANA, AXS and SAND holders are in the red.
Digging deeper, Axie Infinity and The Sandbox bear the brunt. Axie Infinity, once famous for its vibrant in-game economy, reveals that 99.54% of AXS token holders are now “no money”.
Similarly, The Sandbox, a virtual playground for gamers, shows that 98.34% of investors are below the surface. Decentraland and Enjin Coin have been less affected, but still have a fair share of investors in the downside.
Light of hope?
In July 2023, Apple’s Vision Pro debut and Meta CEO Mark Zuckerberg’s positive remarks gave us a glimmer of hope, suggesting a possible recovery for the Metaverse. However, the momentum seems to be fleeting. Deep-seated concerns over security, utility and player retention remain barriers. Adding to the storm, the U.S. Securities and Exchange Commission (SEC) took pivotal action in June 2023, unleashing The Sandbox, Axie Infinity and Decentraland in a lawsuit against Binance and Coinbase. It is classified as “securities”.
The meteoric rise and subsequent decline of the metaverse sector in the cryptocurrency market serves as evidence of the volatile nature of investments. Due to changing investor focus and regulatory challenges, the future of the Metaverse remains a topic of intense speculation.
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