Is the Metaverse Decoupling from Bitcoin Dominant Market? Gamers Say Yes

The metaverse has expanded rapidly in 2021 and is set to explode in 2022. It’s nascent play-to-earn games are coming to fruition, with games such as Axie Infinity and metaverse platforms such as The Sandbox performing exceptionally well with large active user bases.

However, Bitcoin has failed to reach new all-time highs that many had expected in 2021. The overall market has stagnated in recent weeks, but there is a subset of cryptocurrency assets that has outperformed Bitcoin, and that is the metaverse and gaming sector.

Metaverse standout The Sandbox and its competitors such as Decentraland, Illuvium, UFO Gaming, Superfarm, and Big Time are all vying for their own chunk of the metaverse, and most importantly users.

With its Alpha environment now open, users have been flocking to The Sandbox at an exponential rate. In November, The Sandbox announced on their Medium channel that their user base has grown 500% this year, reaching 500K wallets, as well as having raised $93 million for development. It is quickly becoming the most significant virtual world built on the blockchain with digital plots of land selling at premium prices.

Well known celebrities such as rapper Snoop Dogg are building deep interactive experiences with a built-in fan base who are coming on board to get close to their heroes in the metaverse. Major real-world brands such as Adidas are also building their own branded experiences and special events in The Sandbox and are gearing up for other platforms as well.

This is all while Bitcoin and the rest of the market fails to reach new all-time highs in Q4 of 2021 that many analysts and investors had expected.

Comparing charts over the last 30 days shows the disparity between the declining broader market as indicated by Bitcoin ($BTC), and the thriving metaverse/gaming market with standout performers such as The Sandbox ($SAND):

The metaverse charts are much greener than Bitcoin’s chart. Why? This has more to do with the human psychology of gamers and less with technical analysis charts.

The cryptocurrency retail investor market is flooded with young investors, and you guessed it: many of them are gamers… serious gamers. This subset of investors has a different outlook and perhaps different goals than a trader in the decentralized finance sector has, for example.

Gamers are very serious about living an alternate reality in the metaverse. They don’t just want to play a game, but rather be immersed in a virtual world. They want to eschew their ordinary lives for the limitless fantasy of the metaverse, where they can be more prosperous in a second life, flexing their hard earned NFT assets on expensive plots of digital land

As Axie Infinity has established itself as the most popular crypto-based game in 2021, The Sandbox is moving to become the market leader in metaverse virtual worlds, as they have many users actively using the platform already, but will soon be joined by up and coming metaverse, NFT, and gaming competitors such as UFO Gaming and Superfarm as they begin to release access to their platforms.

Elliot Wainman, founder and CEO of Superfarm, agrees that all indications point to metaverse and gaming tech breaking out from the rest of the marketplace: “Crypto gaming will fully decouple in 2022, and there will be no more cycles”.

Another indicator that the metaverse is breaking away from Bitcoin is it’s very zealous venture capital funding. Gaming and metaverse companies are being supercharged with enormous amounts of VC funds by hopeful outside investors such as Paradigm, BoostVC, and other VC firms.

So what would prevent the metaverse from decoupling from Bitcoin’s market dominance? Overvaluations.

Although VC money is flowing into the metaverse like water, there is a long way to go for most of these companies to actually develop their platforms. Fully-functional immersive games and environments with large active user bases can take years to build. Currently, most games are still in beta version at best, and some have no product at all available to the public yet.

Some gaming studios have even produced short gameplay videos and screenshots in order to lure in more investors, while behind the scenes there is little development completed, and very few active users, creating an overvalued asset.

The VC’s are accepting huge risk here. The fact is, history shows AAA game titles often take several years to fully develop. This spells potential trouble for investors in the mid-term, as interest could wane for lack of actual gameplay, and some may come to the realization that many of these platforms are less substantial than their funding (and marketing) suggests.

The good news for investors is that for now, the metaverse appears to be blazing forward regardless of the rest of the market, especially Bitcoin.

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