During the crypto market boom in November 2021, the cumulative market capitalization of the “big four” metaverse projects reached $16 billion. Analyst Ibrahim Ajibade explores the critical factors driving 98% of metaverse altcoin holders to losses in 2023.
Metaverse marked the 2021 rally, but…
At the top of the market in November 2021, buzzwords like Metaverse, GameFi, and Play-to-Earn dominated the crypto space. Just two years later, most investors caught in the Metaverse spree are now counting their losses. cryptocoin.comAs you follow, during the 2021 crypto market rally, The Sandbox (SAND), Axie Infinity (AXS), Enjin Coin (ENJ) and Decentraland (MANA) were the four big projects that unquestionably dominated the Metaverse and GameFi industry.
Notably, the cumulative market capitalization of the four tokens totaled $16 billion at the peak of November 2021. At that time, these Metaverse tokens accounted for 0.5% of the $3 trillion global crypto market cap. However, as the crypto winter began, Metaverse altcoin projects received widespread criticism, from security to privacy to community governance and the lack of long-term HODLing incentives.
Four major metaverse altcoin market caps drop 92%
As a result, as of September 2023, SAND, AXS, ENJ, and MANA are now collectively worth just $1.23 billion. This represents a staggering 92% drop compared to the market cap of $16 billion recorded in November 2021. To put this drop in the right context, the market dominance of these four Metaverse tokens is currently down to 0.12% of the global crypto market cap.
Metaverse Market Cap – ENJ, MANA, AXS, SAND | Source: SantimentMarket cap is a financial measure that represents the total value of the circulating supply of a cryptocurrency. It provides an estimate of the overall value of a blockchain at a given point in time. By summing up the market cap of the four major metaverse altcoin projects, investors can get a clear picture of the systemic importance of the industry within the broader cryptocurrency market. This highlights the fact that crypto investors have become increasingly disinterested in the metaverse sector over the past two years. And now they are allocating their capital to other more resilient sectors and emerging fads.
Majority of Metaverse altcoin investors are shaken by losses!
The game may not be over yet. But those who bought the 2021 metaverse hype are already counting their losses. IntoTheBlock’s Historical In/Out of the Money (IOMAP) data estimates the open or profitability levels of all wallet addresses holding a given token. It is obtained by comparing current prices with the average cost of acquiring these tokens. The historical IOMAP data below shows that the overwhelming majority of current ENJ, MANA, AXS and SAND holders are in the red.
Of the four major metaverse projects, the owners of Axie Infinity and The Sandbox are the worst off. Once known for its bustling in-game economy, Axie Infinity is an NFT-based online video game developed by Vietnamese studio Sky Mavis. Historical data from IntotheBlock shows that 99.54% of all addresses that have purchased AXS are currently “at a loss”.
Metaverse Historical In/Loss data – AXS, SAND | Source: IntoTheBlockIn second place is the Sandbox project, a virtual world where players can build, own and monetize their gaming experiences. 98.34% of those who bought the altcoin token are also currently underwater. Meanwhile, Decentraland and Enjin Coin investors are also far from profitable. Decentraland became popular with its live virtual marketplace and community hub where users create, buy and sell digital real estate. However, as of September 1, 2023, 89.04% of investors holding the native SAND token are also in negative territory.
Metaverse Historical On Profit/Loss data – MANA, ENJ | Source: IntoTheBlockThe last of the four, the Enjin Coin ecosystem offers unique software that allows developers to create and manage virtual goods on the Ethereum Blockchain. Local ENJ token holders suffered a similar fate. 75.5% of investors in Enjin are also currently sitting in a deep open position.
t for these altcoin projects the chance of recovery is getting smaller and smaller
In short, the cumulative market capitalization of ENJ, MANA, AXS and SAND fell 92% from $16 billion to $1.23 billion between November 2021 and September 2023. But even more worryingly, it shows that the dominance of metaverse tokens in the crypto industry has also decreased by around 76%. Apple’s Vision Pro launch and the upbeat statements of Meta (Facebook) CEO Mark Zuckerberg triggered a slight resurgence in the Metaverse industry in July 2023. But now, that momentum seems to be fading fast for a number of reasons.
First, there are still criticisms regarding safety, long-term benefit, and player retention. In addition, the US Securities and Exchange Commission (SEC) has also heightened Metaverse woes. In June 2023, the SEC filed lawsuits against Binance and Coinbase. The regulator listed Sandbox, Axie Infinity, and Decentraland as “securities” in the filings. After that, SAND dropped about 44%, AXS 33% and MANA 40%. As a result, the social sentiment surrounding metaverse altcoin projects is currently overwhelmingly bearish. Still, this may be of interest to strategic investors looking to buy the dip in hopes of a future revival.
