During the November 2021 crypto market boom, the cumulative market cap of the “Big 4” Metaverse projects reached $16 billion. An on-chain analysis explores the critical factors that drove his 98% of Metaverse token holders to losses in 2023.

Buzzwords such as Metaverse, GameFi and Play-to-Earn dominated the crypto space at the top of the market in November 2021. Now, just two years later, most investors who piggybacked on the Metaverse hype are starting to count their losses.

The Sandbox (SAND), Axie Infinity (AXS), Enjin Coin (ENJ) and Decentraland (MANA) were probably the Big 4 projects that dominated the Metaverse and GameFi sectors during the 2021 cryptocurrency market uptrend.

Notably, the cumulative market cap of the four tokens reached a total of $16 billion at its peak in November 2021. At the time, these Metaverse tokens accounted for his 0.5% of the $3 trillion global cryptocurrency market cap.

But as crypto winter began, the Metaverse project drew widespread criticism, ranging from security to privacy to community governance to the lack of long-term HODLing incentives.

As a result, as of September 2023, the combined value of SAND, AXS, ENJ and MANA is only $1.23 billion. That’s a staggering 92% drop from its November 2021 record market cap of $16 billion.

To put this drop in the right context, the market power of these four Metaverse tokens is now down to 0.12% of the global cryptocurrency market capitalization.

Market capitalization is a financial indicator that represents the total circulating supply of cryptocurrencies. It provides an estimate of the overall value of the blockchain at a given point in time.

Combining the market capitalization of the four major Metaverse projects gives investors a clear picture of the systemic importance of this sector in the broader cryptocurrency market.

This underscores the growing indifference of cryptocurrency investors to the metaverse space over the past two years. And now they are allocating capital to other more resilient sectors and emerging epidemics.

It may not be game over yet, but those who piggybacked on the 2021 Metaverse hype are already counting their losses.

IntoTheBlock’s Historical In/Out of the Money (IOMAP) data estimates the deficit or profit level for all wallet addresses holding a particular token. It is calculated by comparing the current price and the average cost of acquiring those tokens.

The historical IOMAP data presented below show that the overwhelming majority of current ENJ, MANA, AXS and SAND holders are in the red.

Of the four big metaverse projects, the owners of Axie Infinity and The Sandbox are the worst.

Once known for its tumultuous in-game economy, Axie Infinity is an NFT-based online video game developed by Vietnamese studio Sky Mavis. IntotheBlock’s historical data shows that 99.54% of all addresses that have acquired AXS are currently “underfunded.”

A close second place goes to sandbox projects, virtual worlds where players can build, own, and monetize gaming experiences. A whopping 98.34% of those who bought SAND tokens are also currently submerged.

Meanwhile, investors in Decentraland and Enjin Coin are also far from profitable.

Decentraland gained popularity with its vibrant virtual marketplace and community center where users create, buy and sell digital properties. However, as of September 1, 2023, 89.04% of investors holding native SAND tokens are also in negative territory.

The final of the four, the Enjin Coin ecosystem offers proprietary software that allows developers to create and manage virtual goods on the Ethereum blockchain. Native ENJ token holders have suffered a similar fate. His 75.5% of Enjin investors are also currently in the red.

Chances of a rebound appear to be fading

In a nutshell, the cumulative market capitalization of ENJ, MANA, AXS and SAND fell by 92% from $16 billion to $1.23 billion between November 2021 and September 2023. But more alarmingly, it also shows that the dominance of Metaverse tokens in the cryptocurrency industry is shrinking. Almost 76% increase.

The launch of Apple’s Vision Pro and the optimistic remarks of Meta (Facebook) CEO Mark Zuckerberg sparked a modest resurgence in the Metaverse sector in July 2023.

But now that momentum seems to be waning rapidly for a number of reasons. First, criticisms around security, long-term utility and player retention still persist. But the US Securities and Exchange Commission (SEC) has also compounded the Metaverse’s predicament.

In June 2023, the SEC filed a lawsuit against Binance and Coinbase. The regulator put The Sandbox, Axie Infinity and Decentraland on its next list. “Securities”” stated in the document. In the aftermath, SAND fell about 44%, AXS 33% and MANA 40%.

In conclusion, social sentiment surrounding the Metaverse is overwhelmingly bearish right now. Still, this could attract strategic investors looking to buy dips in hopes of a future recovery.