The metaverse has been on the rise in popularity over the past few months, but the trend has recently reversed, with catastrophic consequences for the ecosystem.
The crypto winter has been talked about, in particular because of its catastrophic influence on the price of cryptocurrencies. NFTs and the metaverse seemed, at first, untouched by the crisis. However, disinterest has not failed to hit the market for non-fungible tokens, while that for virtual worlds has been gray for a few days.
Having become the new playground for brands, the metaverse has been the scene of great speculation for three years. Investors buy virtual land there before reselling it a few weeks later. Strong demand has allowed prices to soar exponentially. According to a report from Chainalysis, the cost of virtual real estate is said to have increased by 879% between September 2019 and March 2022.
However, the phenomenon is coming to an end. While the price of a plot could be around $15,000 at the start of 2022, it would currently be worth only a few thousand. A trend totally in opposition to the rising curves of last fall. The fall is steep, with an overall decline of 66% according to The Information. However, it could be that the numbers are actually higher, as the depreciation is continuous.
The phenomenon can be explained in several ways. First of all by the cryptocurrency crisis, which made it possible to depreciate certain lands. Faced with the seriousness of the fall of digital currencies, users may have turned away from virtual real estate to monitor their precious coins.
Secondly, the bursting of the speculative bubble seems to be the main reason. The strong buying pressure followed by the inability of the market to keep pace would have led to the massive resale of land. Such an event is not unknown to the crypto sphere, since it occurs every four years on the course of Bitcoin.
Towards better virtual real estate?
Plots in the metaverse are facing obvious disinterest. This usually occurs when investors are no longer able to generate profit. This is without taking into account the influence of businessmen such as Mark Cuban, who valued interest-free virtual real estate. Indeed, it has no use in the real world and is simply used to speculate.
However, this crisis in the metaverse could do the crypto sector a disservice. Indeed, the lack of profit could purify users. Investors only attracted by profits cause the successive creation of speculative bubbles. The latter prevent the development of technologies since their explosion triggers real crises that sometimes require starting from scratch.
The big greedy may soon have to look elsewhere since the metaverse no longer brings them money. However, they could return once the situation stabilizes. Likewise, we are not immune to a rent crisis within virtual worlds.
The real estate crisis will nevertheless have the merit of passing on a fashion considered harmful for many, also stopped by the crypto winter. Deserted of speculators, the metaverse may be able to offer land at a stable price and on which companies and individuals can build as they please. However, the public will have to agree to return to virtual worlds after this bad publicity.
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