It is undeniable that, linked to the metaverse cryptocurrencies have been among the least likely candidates for price appreciation heading into 2023. Indeed, price action with this group of assets has been dismal, with many tokens in this space losing 80% of their value, or even more, in 2022 alone.
However, with a new year came improved optimism for this sector. Starting at 1:45 p.m. ET, Flux (FLUX 14.18%), Decentralized (MANA 4.52%)and The sandbox (SAND 2.71%) increased by 13.7%, 12.6% and 12.1% respectively in the last 24 hours.
These movements seem to be linked to a series of interesting catalysts for these projects.
Flow reported a stabilization in trading volume over the past month, which is important for investors as it is a non-fungible token (NFT)-focused blockchain project that has been in decline for some time. time. Flow is also among the projects that have downsized, making its growth prospects less likely to materialize.
Decentraland announced Jan. 6 that an upcoming architecture and design competition will be able to accommodate 50,000 visitors over a five-day period. This event will be watched closely by those who are optimistic about the long-term potential of digital real estate.
Finally, The Sandbox reported some rather impressive digital plot sales over the past few weeks, with proceeds totaling over $1.6 million. So, while demand seems to remain very low in this space, The Sandbox remains among the key locations that investors seem to be looking for right now.
Whether it’s trading volumes, building activity, or any measure of activity with metaverse-related crypto projects, it’s been a disastrous year for this industry. As a result, investors looking to justify the high valuations placed on these tokens in 2021 on anticipated growth have had little to grasp during this crypto winter.
That said, these three projects certainly offer speculative upside potential for investors looking to play this crypto rally. Overall, cryptocurrencies and other digital assets such as NFTs are difficult to value. This can lead to significant overstatements and understatements in terms of valuation from time to time. If another rally begins, these high beta tokens could be among the best ways for aggressive investors to catch that rally.
Whether it was smart to try to catch this rally (or what could instead be a falling knife) will be seen in hindsight. Today’s rally is pretty broad based with most risk assets getting a head start. Various macroeconomic forces seem to be driving such risky sentiment, so until sentiment cools, it’s possible the crypto market could last a decent year.
That said, until these metaverse projects can show significant growth, it’s hard to pinpoint a fundamental catalyst for this group. In the absence of fundamentals, this rally becomes much more precarious. So this is an area that I will be watching closely, at least for now.