The bear market effect of Bitcoin is being transmitted to various other fields. According to data from research institute WeMeta, the average price of virtual land on six platforms based on Ethereum dropped from about $17,000 apiece in January this year to about $2,500 apiece in August, a decrease of 85%.
According to a report by Chinese media outlet Blockchain Daily on August 10, six mainstream virtual real estate platforms – The Sandbox, Decentraland, Voxels, NFTs Worlds, Somnium Space and Superworld – all witnessed transaction volume decreases by about 90% compared with a high point in November 2021.
The average price of land sold on Decentraland in February 2022 peaked at $37,238. But as of August 1, their average price has dropped to $5,163. Similarly, the average selling price of lands on The Sandbox dropped from around $35,500 in January to around $2,800 in August.
After Facebook announced that it would focus on metaverse development and change its company name to “Meta,” there has been a global upsurge in metaverse products, and market demand for virtual real estate had also been growing rapidly. Real estate developers and investment firms are betting on the future of virtual reality, even snapping up properties in popular platforms such as Decentraland and The Sandbox for millions of dollars.
On November 25, 2021, a 4.87-square-meter digital land sold for $2.43 million on Decentraland. The land buyer is Tokens.com, a digital asset investment group. Hong Kong property magnate Adrian Cheng paid $5 million for a piece of land on The Sandbox. Business giants such as Warner Music, Adidas, Gucci and HSBC have also jumped into the new field.
According to a report by Brandessence Market Research, an overseas market research institution, the metaverse real estate market is expected to grow at a CAGR of 31% from 2022 to 2028.
However, with the advent of a crypto bear market and sharp price plunge, well-known companies and celebrities who once spent huge sums of money on virtual real estate are facing losses. Among them, JJ Lin, a famous singer, spent $123,000 buying three virtual real estates on Decentraland. At present, their value is about $16,628, with a loss of 86.5%.
Some insiders told the Blockchain Daily that the current development of the metaverse is still in early stages. Insufficient commercialization and application, poor experience of game users, and hot spot transfer has led to a sharp drop in the market.
Blockchain Daily also quoted the opinion of Chen Xiaohua, executive director of the Metaverse Industrial Collaborative Innovation Center at Beijing University of Posts and Telecommunications. Chen believes that virtual real estate is also a kind of NFT in essence. Its intrinsic value is its scarcity, while its external value is not only related to the playability and economic model design of the sandbox itself, but is also closely related to its public chain ecology.