The bear market effect of Bitcoin is further transmitted to various fields. Statistics show that since 2022, the average price of the six major virtual real estate platforms has dropped from about US$17,000 to about US$2,500 now, a drop of 85%.
Virtual real estate can be described as hot in 2021, and some companies even spent US$2.43 million to bid for the "Land King". Some agencies have predicted that the market is expected to grow at a compound annual growth rate of 31% from 2022 to 2028.
However, with the advent of the crypto bear market and a sharp plunge in prices, star companies and celebrities who have announced the purchase of virtual real estate at high prices are facing floating losses. Among them, the well-known singer JJ Lin once bought 3 pieces of virtual real estate in Decentraland for US$123,000. The current value of these three pieces of land is about US$16,628, with a floating loss of 86.5%.
Some people in the industry analyzed to the reporter of Blockchain Daily that the current development of Metaverse is still in the early stage, commercialization, virtual real estate application scenarios are insufficient, the user experience of games based on virtual real estate development is not good, and the transfer of hot spots and the departure of hot money have caused The market plummeted.
"Land King" sold for US$2.43 million
After Facebook announced that it would focus on the development of the Metaverse and change the company to "Metaverse (Meta)", there was a wave of "Metaverse" craze around the world.
According to a report released by cryptocurrency giant Grayscale last November, the advertising, digital activities, e-commerce and hardware fields in the metaverse may generate $1 trillion in annual revenue.
Against the background of the vigorous development of the metaverse, the market demand for virtual real estate is also growing rapidly. Real estate developers and investment firms are betting on the future of virtual reality, even snapping up properties in popular virtual environments such as Decentraland and The Sandbox for millions of dollars.
In April 2021, during the period when NFTs were popular, virtual properties sold for between $6,000 and $100,000.
In late 2021 and early 2022, many major brands will appear in or purchase "property" in Decentraland, including Samsung, Adidas, Atari, PwC, and Miler Lite. Sotheby's, an internationally renowned auction house, also held the first metaverse auction.
On November 25, 2021, a piece of digital land of 4.87 square meters was sold for a high price of US$2.43 million on the virtual world platform Decentraland, becoming the "land king" of the virtual world.
The land buyer is Tokens.com, a digital asset investment group. The land for sale is located on a plot in the center of the fashion district (Fashion Street Estate), and the buyer Tokens.com stated that they are looking for opportunities to develop properties in Decentraland, hoping to lease these properties to fashion companies as event and retail space. The company is also working on an 18-story skyscraper that it hopes to lease to lawyers or cryptocurrency exchanges.
Previously, the highest transaction record on the Decentraland platform was US$913,000 (approximately RMB 5.81 million).
At present, virtual real estate transactions are mainly concentrated on six major platforms, which are Decentraland, The Sandbox, Voxels, SomniumSpace, NFTWorlds and SuperWorld.
According to data from the third-party data service provider DappRader, the transaction volume of virtual real estate in November 2021 was US$228 million, and the total market value of virtual real estate reached US$4.6 billion in the same month.
According to a report by BrandEssence MarketResearch, an overseas market research organization, the metaverse real estate market is expected to grow at a compound annual growth rate of 31% from 2022 to 2028.
The average price of virtual real estate fell by 85% in half a year
However, after the bitcoin surged in November last year, the market went bearish. Especially in May this year, affected by the Luna thunderstorm incident, the cryptocurrency plummeted, the virtual real estate market also cooled down rapidly, and the price plunged sharply.
According to data from WeMeta, the Metaverse NFT land aggregation and analysis platform, the prices of the six major virtual properties (Decentraland, TheSandbox, Voxels, SomniumSpace, NFTWorlds, and SuperWorld) will drop sharply in 2022.
Taking Decentraland as an example, the average price of land sold in February 2022 reached a peak of $37,238. But as of Aug. 1, their average price had dropped to $5,163. Likewise, the average selling price of The Sandbox dropped from around $35,500 in January 2022 to around $2,800 in August.
Overall, the average price of these 6 virtual properties dropped from about US$17,000 in January this year to about US$2,500 in August, an 85% drop in half a year.
According to WeMeta data, the total monthly transaction volume of the six major platforms including Decentraland and TheSandbox has dropped from a peak of US$1 billion in November 2021 to about US$157 million in August 2022, a drop of 84.3%. Last year's 16,000 transactions fell to 2,000 in August this year, a drop of 87.5%.
According to public information, the well-known Chinese singer JJ Lin also bought 3 pieces of virtual real estate in Decentraland for US$123,000 (approximately RMB 783,000). Lin Junjie even explained on social media where the virtual real estate he bought is located.
According to WeMeta data, the value of the three lands of JJ Lin is currently 3.75ETH, 3.71ETH and 2.5ETH respectively, which is about 16628 US dollars in total, with a floating loss of 86.5%.
According to Chen Xiaohua, executive director of the Metaverse Industry Collaborative Innovation Center in Beijing University of Posts and Telecommunications Science and Technology Park, virtual real estate is essentially a kind of NFT. The playability of the sandbox itself is not only related to the design of the economic model, but also closely related to the ecology of the public chain where it is located.
He believes that the current development of Metaverse is still in the early stage, and there are still many challenges and uncertainties in commercialization and regulatory policies. Therefore, investment in virtual real estate should be treated rationally, considering whether its risk-return ratio matches, and avoiding bubbles.
Chen Xiaohua told the Blockchain Daily reporter that since the collapse of LUNA, the virtual asset trading market has been in constant turmoil, and many NFT projects have fallen into a crisis of trust. callback.
Da Hongfei, CEO of Fenbu Technology, also told reporters that the listing of Roblox last year and the renaming of Facebook to Meta ignited the entire Metaverse sector, attracting a lot of hot money from the currency circle into the hype.
Da Hongfei analyzed that, from a fundamental point of view, the application scenarios of virtual real estate are insufficient, and the user experience of games developed based on virtual real estate is not good; from a financial point of view, hot spots have shifted and hot money has left the market, leading to a sharp drop in the virtual real estate market.
JinseFinance
Snake
Edmund
Nulltx
Finbold
Bitcoinist
Cointelegraph