The Metaverse housing market is currently experiencing its own form of a housing crisis. Moreover, the prices of virtual lands within the Metaverse have been witnessing a sharp decline throughout 2022.
This downturn is attributed to a decrease in customer demand. Additionally, the challenging times faced by the cryptocurrency market have directly impacted the value of virtual lands in the Metaverse.
Metaverse Virtual Land Values Have Dropped 85%
WeMeta data reveals that the values and other key metrics for Ethereum Blockchain-based projects like Sandbox and Decentraland are undergoing significant declines. For instance, in February 2022, the average price for a plot of land in Decentraland peaked at $37,238. However, by August 1, the average price had plummeted to $5,163. Similarly, in Sandbox, joint sales dropped from about $35,500 in January to around $2,800 in August.
Virtual lands, which were trading at around $17,000 in January, decreased to approximately $2,500 by August. In essence, the average price for a piece of digital land in the six largest Ethereum Metaverse projects fell by 85 percent. This decline in property purchases suggests waning interest in Metaverse projects. Sales figures, which peaked at $1 billion in November 2021, dwindled to about $157 million in August 2022, alongside a reduction in the volume of land sold each week.
Additionally, the market capitalization of currently circulating Metaverse tokens has dropped by over 80 percent, mirroring the broader cryptocurrency industry’s downturn amid unfavorable macroeconomic conditions. For example, the value of Decentraland’s MANA token decreased from $10 billion in November 2021 to $2 billion in August 2022.
Similarly, the Roundhill Ball Metaverse exchange-traded fund (METV), which invests in blockchain-based Metaverse projects, has also seen a decline. METV’s daily chart has fallen nearly 45 percent from its November 2021 high of $17.11. Moreover, companies in its stock portfolio, such as Meta (formerly Facebook) and Snapchat, have reported significant losses in the second quarter.
Despite the market downturn, a recent McKinsey study indicates continued heavy investment in the Metaverse. Between January and May, private equity investors allocated over $120 billion to Metaverse ventures, more than doubling the total $57 billion invested in 2021. Although facing a current slump, McKinsey remains optimistic about the Metaverse’s future, predicting it could grow into a $5 trillion industry by 2030.
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