The real estate bubble has burst in the metaverse
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The crisis in the cryptocurrency and NFT market has caused the prices of plots and land to plunge. Sales are falling.
It looks like the metaverse craze has died down. The value of cryptocurrencies has fallen significantly in recent months, impacting the metaverse economy which is causing the value of virtual land plots to drop. According to media figures TheInformation, the average price per plot has fallen by more than 66% in five months. NFT Worlds, the third ranked metaverse, sees the average price of its land drop to $2,328. It was 18,095 in March. “The Entire Cryptocurrency Universe Has Been Retreating From November 2021 Peak», notes the economist Christophe Barraud. “The MANA and SAND currencies, which enable transactions in the Decentraland and The Sandbox metaverses, are worth significantly less“. The first has lost two thirds of its value, three quarters for the second.
“The real estate boom in the metaverse is turning into a meltdown»
” SEE AS WELL – Metavers: “We embark everyone in a very speculative world”, notes Dominique Boullier
Another phenomenon that explains the bursting of the real estate bubble of the metaverse, many landowners want to make a profit in the short term. They rush to resell their acquisitions (within about 6 months on The Sandbox). Speculators have multiplied since the emergence of these virtual worlds, which had low supply and high demand. The excessive valuations of certain lands have caused frustration among investors. Real estate sales have all but dried up. Between November 2021 and June 2022, the number of transactions fell by 97% on Decentraland and The Sandbox according to analyzes by the WeMeta marketplace. At the peak of November 2021, 16,000 property sales were recorded daily in the metaverses. Last June, there were only 2,000.
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A still too young virtual society
“Like many new phenomena, people followed a fashion and bought anything and everything», notes the economist. “Today buyers are looking more closely at projects, they are looking to own assets and find added value to be made. But when you get into cryptos and you see that everything is going down, it doesn’t encourage you to continue “.
Today, speculation seems to be calming down and big investors are holding back their stocks.“Large companies like Carrefour, which were looking for a marketing effect, will wait for the return of a certain enthusiasm“. Christophe Barraud remains positive about the future of the market on the web3. “We are in a phase of consolidation of these new virtual markets. It is still a young and vague phenomenon for many, which frightens some investors. You have to be patient so that the market reaches a certain maturity. Many projects and alternatives to the big metaverses will be born and the competition will allow to balance the situation“. If the rates are attractive for new buyers, we should be wary of an extension of this bad dynamic.
” SEE AS WELL – “There is a social dimension in the metaverse”, enthuses Jean-Michel Jarre
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