© The Sandbox
A major real estate crisis affects the metaverse. Since the beginning of the year, the average price of virtual plots has fallen considerably. Like cryptocurrencies and NFTs, the sector is suffering from the economic downturn.
The price of digital plots in the metaverse is at half mast. According to a study by The Information, the average price of virtual land has contracted by more than 80% this year. Individuals and entities having invested in parcels for several million dollars are in deficit at the moment.
At the same time, transaction volume is down 90% from November 2021, shortly after Facebook rebrands itself as Meta and metaverses become very popular.
“The metaverse is in the midst of a real estate crisis. Sales volumes and average prices for virtual land have plunged this year,” says The Information in a survey of the metaverse’s “real estate boom.”
The data, compiled by analytics platform WeMeta, comes from major metaverses that have sprung up in recent months, including The Sandbox, Decentraland, Voxels, NFTs Worlds, Somnium Space, and Superworld. On these platforms, it is possible to invest in virtual real estate, in the same way that one invests in apartments or houses in the real world.
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Why Metaverse Plot Prices Are Falling
The value of digital land is currently correlated with the cryptocurrency and non-fungible token (NFT) market. However, the value of all digital assets has reduced significantly since the spring of 2022. The crypto-asset market has lost billions of dollars in valuation in a few weeks. The crash of the Luna ecosystem, the bankruptcy of Celsius or the 3AC investment fund, have deeply damaged investor confidence. As a result, the price of digital currencies has plunged. For example, King Bitcoin is currently trading around $23,000, far from its record high at the end of 2021.
Same story on the side of non-fungible tokens. The NFT sector is seeing a sharp slump in the number of sales. During the month of July 2022, $626.11 million was traded through NFT sales platforms, compared to $884.68 million in June.
“A slowing real economy could reduce brands’ appetite to invest in building their presence in metaverse,” notes The Information.
The digital asset sector is suffering from the collapse of traditional financial markets. In a context of inflation and geopolitical uncertainty, most stock market indices have fallen sharply in recent months. Deprived of liquidity, investors are then massively turning away from the riskiest assets, such as cryptocurrencies, NFTs and digital plots in metaverses.
The Information