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 shrunk by more than 80% this year. Individuals and entities having invested in parcels for several million dollars are in deficit at the moment.
In parallel, trading volume dropped by 90% compared to November 2021, shortly after Facebook rebranded itself as Meta and metaverses became very popular.
” The metaverse is in the midst of a real estate crisis. Virtual land sales volumes and average prices have plunged this year “, explains The Information in a survey devoted to the “real estate boom” of the metaverse.
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 toinvest in virtual real estatethe same way 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 to the cryptocurrency market and non-fungible tokens (NFT). 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 instance, king bitcoin is currently trading around 23,000 dollars, far from its record 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, up from $884.68 million in June.
“The slowdown in the real economy could reduce the desire for brands to invest in strengthening their presence in the metaverse”notes The Information.
The digital asset industry 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.