Just last year, the Metaverse real estate market in this era was as frenetic as tulip mania in 17th-century Holland. At that time in Amsterdam, the price of luxury tulips jumped to a few months’ wages of a worker, as did the very high prices of virtual land in the Metaverse. However, it seems that this orgy between the two across time and space is inevitably headed for a tragic ending in a plunge.
The boom in the Metaverse real estate market is very similar to the tulip mania in Holland. Over the past two years, the rise of virtual worlds has made Metaverse Land a focal point for investors to vie for. This has caused virtual land prices to skyrocket, to the point that some parcels have surpassed real-world prime land prices.
However, in recent months, prices have fallen sharply in the Metaverse real estate market. This phenomenon is reminiscent of the tragic ending of the tulip mania of the time. Many investors are beginning to worry that the Metaverse real estate market will follow in its footsteps, triggering an unprecedented market collapse.
So-called metaverse real estate refers to digital land on virtual reality platforms, represented by non-homogenized tokens (NFTs) that represent its ownership and value. Users can create and experience a variety of service content on this land, from games, social, entertainment to advertising, education, healthcare, and more.
In 2015, real estate in the Metaverse began to go on sale when Decentraland, an Ethereum blockchain-based virtual reality platform, launched the LAND token as a digital proof of land ownership. A user was able to purchase his LAND with his MANA, his token native to Decentraland, and freely build and plan his own spaces and experiences on top of it.
Since then, thanks to the concept of the Metaverse and the hot NFT market, Metaverse real estate has seen wave after wave of price increases, setting many amazing transaction records.
According to CNBC, Metaverse real estate deals are expected to reach $500 million in 2021 and surpass $1 billion by 2022. According to a report by overseas research firm Brand Essence Market Research, the size of the Metaverse real estate market is expected to grow rapidly at an average annual growth rate of 31% from 2022 to 2028.
Some investors use digital assets as investments such as stocks and bonds. Others simply buy or lease real estate in the Metaverse and manage it. Just as everyone is enjoying the joy of getting rich, market winter has arrived without warning.
According to data from WeMeta, a metaverse analytics platform, the price of virtual real estate has started to fall steadily over the past few months, with purchases falling off a cliff and previously purchased virtual land now costing their original selling price a fraction of a cent. It’s only worth getting lower.
The median transaction price on Decentraland, currently the world’s largest metaverse real estate sales platform, has fallen nearly 90% from $45 in 2022 to $5. In it, his three pieces of virtual real estate, which Lynn previously purchased for his $123,000, are now only worth about $10,000, a 91% variable loss.
For now, this quiet winter is also the tragic end of the inevitable plummeting meta-universe real estate market.
The plunge in the price of Bitcoin and other cryptocurrencies in 2022 has severely damaged investor confidence in the Metaverse real estate market, causing price declines.
According to cryptocurrency price-tracking site Coinmarketcap, mainstream cryptocurrencies suffered a significant drop last year. NFTs were also severely affected, with data from Forechain showing that NFT performance weakened in 2022, with trading volumes, trading values, and the number of buyers and sellers dropping significantly. In short, falling cryptocurrency prices are another big reason for the plummeting Metaverse real estate prices.
The decrease in users was also a factor in the sudden drop. The users of the Metaverse real estate market are mainly virtual reality gamers and social media users, and if these users are lost or diverted by competition from other markets, the demand for the Metaverse real estate market will decrease and accordingly the market will decrease. price.
Now that ChatGPT is on fire and Metaverse real estate is inherently an attention economy, a drop in global attention will drive prices down on all these parcels.
In addition, the application scenario of the metaverse real estate market is also the reason for the price decline. Compared with the real estate market, the metaverse real estate market has relatively low capacity and use value, and lacks sufficient rarity and application scenarios.
In summary, there are multiple reasons why Metaverse real estate prices have plummeted. The investment decisions and actions of investors and developers have in the past lacked prudence and sanity, and did not fully consider the risks and uncertainties of the market. Had they invested more carefully and wisely, they may not have faced such a large loss.
ChatGPT is no exception, it’s only a matter of time before it goes hot or cold. Only continuous learning and improvement are essential to staying competitive.