The metaverse housing market is going through its own housing crisis because the prices of its virtual lands dropped sharply in 2022. This was caused by a drop in customer demand and a bad market for cryptocurrencies.
In 2022, gross land sales will drop by 85%
WeMeta data shows that the values and other important indicators of projects built on the Ethereum blockchain, like the Sandbox and Decentraland, have dropped by a lot.
In February 2022, for example, the average price of a piece of land in all of Decentraland reached a high of $37,238. On August 1, however, their median price dropped to $5,163. Like the Sandbox, the value of the common sale dropped from about $35,500 in January to about $2,800 in August.
From around $17,000 in January to about $2,500 in August, the average price of a piece of digital land in the six largest Ethereum metaverse projects dropped by 85 percent.
Dmetaverse activity
If not many people buy properties, it could mean that people are losing interest in metaverse projects.
From a high of $1 billion in November 2021 to about $157 million in August 2022, the amount of land (measured in currencies) sold each week has gone down.
Also, the market value of the Metaverse tokens that are currently in circulation has dropped by more than 80% because the cryptocurrency industry as a whole has pulled back because of bad macroeconomic conditions.
For example, the market value of Decentraland’s MANA tokens dropped from $10 billion in November 2021 to $2 billion in August 2022. In the same time frame as Sandbox, SAND’s online capitalization went from about $1.78 billion to $8.4 billion.
Metaverse ETF also goes down in value
The Roundhill Ball Metaverse exchange-traded fund (METV) is falling, just like other metaverse projects that use blockchain. The ETF lets investors buy shares in companies that have been using metaverse as a way to grow.
From its record high of $17.11 in November 2021, METV’s daily chart shows that it has dropped by about 45 percent, and companies in its stock portfolio, such as Meta (formerly known as Facebook) and Snap, have both reported big second-quarter losses.
But a recent McKinsey study says that businesses, venture capital funds, and private equity investors will spend more than $120 billion in the metaverse industry between January and May 2022. This is more than twice as much as the $57 billion that was made in the whole of 2021.
Vitalik Buterin says that Facebook’s metaverse will “fail”
Even though the metaverse market has been falling, McKinsey predicts that it will grow to be a $5 trillion industry by 2030. E-commerce alone is expected to have an impact of between $2 trillion and $2.6 trillion, followed by the $180 billion to $270 billion educational digital learning sector.
