Metaverse: After a year of speculation, the real estate bubble of virtual worlds has burst

The metaverse has been increasing in popularity over the past few months, but the trend has recently reversed with disastrous consequences for the ecosystem.

The crypto winter has been talked about especially because of its disastrous impact on the price of cryptocurrencies. NFTs and the metaverse initially seemed untouched by the crisis. However, disinterest has not failed to hit the market for non-fungible tokens, while for virtual worlds it has been gray for a few days.

After becoming the new playground for brands, the metaverse has been the scene of great speculation for three years. Investors buy virtual land there before selling it on a few weeks later. Strong demand has allowed prices to rise exponentially. According to a report by Chainalysis, the price of virtual real estate increased by 879% between September 2019 and March 2022.

However, the phenomenon is coming to an end. While the price of a lot could be around $15,000 at the start of 2022, it would currently be worth only a few thousand. A trend totally in contrast to the rising curves last autumn. The drop is steep with a total drop of 66% according to The Information. However, it may be that the figures are actually higher, as the depreciation is continuous.

Source: Christophe Barraud’s Twitter account

The phenomenon can be explained in several ways. First of all, by the cryptocurrency crisis, which made it possible to depreciate certain countries. Faced with the severity of the digital currencies’ decline, users may have turned away from virtual real estate to monitor their precious coins.

Second, the bursting of the speculative bubble seems to be the main reason. The strong buying pressure followed by the market’s inability to keep up would have led to the massive resale of land. Such an event is not unknown to the cryptosphere, as it takes place every four years during the life of Bitcoin.

On the road to better virtual real estate?

Plots in the metaverse face obvious disinterest. This usually happens when investors are no longer able to generate profits. This is without taking into account the influence of businessmen like Mark Cuban, who consider virtual real estate uninteresting. In fact, it has no use in the real world and is simply used for speculation.

However, this crisis in the metaverse may do the crypto sector a disservice. In fact, the lack of profit could purge users. Investors attracted only by profits cause the successive creation of speculative bubbles. The latter prevent the development of technologies, as their explosion triggers real crises that sometimes require starting over.

The big greedy may soon have to look elsewhere as the metaverse no longer gives them money. However, they can return when the situation has stabilized. Likewise, we are not immune to a rent crisis within virtual worlds.

The real estate crisis will nevertheless have the advantage of pushing through a fashion considered harmful to many, also stopped by the crypto winter. Abandoned by speculators, the metaverse may offer land at a stable price that companies and individuals can build on as they please. However, the public will have to accept a return to virtual worlds after this bad publicity.

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