With the metaverse still a fairly abstract concept that's yet to achieve mainstream adoption, it seems the current craze is based on hope of what these virtual worlds may one day be worth.
Although the crypto markets have started to bounce back after the carnage seen over the weekend, some sectors were hit harder than others.
Data from IntoTheBlock shows that many of those who own metaverse tokens are short-term traders — with head of research Lucas Outumoro calling this as "a sign of the speculative mania that has been taking place."
After Facebook announced that it was rebranding to Meta in late October, tokens belonging to blockchain-based metaverses rallied hard.
In the space of a month, Decentraland surged from $0.78 to a record $5.90 — up 656%. The current price of $3.81 is a 35% discount from the all-time highs.
It was a near-identical story for The Sandbox, which has also had the added benefit of entering into high-profile partnerships with the likes of adidas. SAND was also priced at $0.78 as of Oct. 28 — and by Nov. 25, broke records after ballooning 991% to $8.51. It too is now down 35% from this peak, settling in at $5.44.
On a seven-day timeframe, the likes of MANA and SAND are currently some of the worst performers in the top 100 cryptocurrencies by market cap. Decentraland's price has plunged by 18.5% over the past week, while The Sandbox is down 20.5%.
By contrast, Bitcoin has dipped by 9.5%
, while Ether is down by a mere 0.7%
over the same timeframe. Speaking to CoinDesk,
"It is no surprise that gaming/metaverse tokens got hit the hardest after the recent hype."
In what might be regarded as a rather worrying development, Outumoro went on to draw parallels with the speculative mania seen around SHIBA INU. It too had a high number of short-term traders.
With the metaverse still a fairly abstract concept that's yet to achieve mainstream adoption, it seems the current craze is based on hope of what these virtual worlds may one day be worth — rather than anything concrete.
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The downturn has also been especially pronounced in the decentralized finance market — and according to Bloomberg,
an index tracking major DeFi tokens has failed to rebound after plunging 24%
over the weekend.
According to the report, the sector was already struggling even before this latest flash crash — with the DeFi Pulse Index down 62.5% over the past seven months. Arca's chief investment officer Jeff Dorman told the publication:
"DeFi has been out of favor and underperforming other sectors for most of the past six months, and that didn’t change over the weekend. What’s different is that other tokens bounced much faster, whereas DeFi stayed depressed."
Indeed, the article noted that a recent hack affecting BadgerDAO wouldn't have helped matters.
As reported by CoinMarketCap Academy yesterday,
crypto worth more than $120 million
at the time was stolen from the popular protocol last week. BadgerDAO has now resorted to writing to the hacker directly — attempting to appeal to their good side by offering a reward if they return the funds.