The increase in MANA and SAND metaverse tokens may soon level off.
Recent metaverse news has centered on MANA and SAND rallies. By the end of 2022, the euphoria surrounding the metaverse that began in 2021 had almost entirely subsided, as the largest initiatives in the field, Decentraland and The Sandbox, had lost 95% of their market value. The drop was primarily attributable to a lack of user growth.
Despite this, the metaverse narrative will continue to thrive in the future. Apple will release virtual reality headsets in the spring of 2023, according to rumors. The announcement caused Decentraland’s MANA tickers to fall $0.71 and The Sandbox’s SAND tickers to fall $0.77, resulting in a price increase of double digits.
Although there is evidence of strong buying volume to support the price pump, the weak fundamentals of metaverse platforms and signs of an overheated market suggest that the price pump is susceptible to a reversal.
The pump-and-dump approach of Apple
Facebook’s (Meta) metaverse debut was one of the most significant catalysts for metaverse tokens. The idea behind Decentraland and The Sandbox is that a decentralized metaverse will flourish more than its centralized counterpart, Meta.
However, the technology has not achieved widespread adoption. Less than 2% of Steam users were VR users in 2022, and the percentage had not increased during the previous two years. This is concerning because the gaming industry was the first to use the technology.
The technology has a fundamental issue in that VR headsets are not suitable for extended use. According to study, prolonged headset use can cause mental health problems.
The recent statement by Apple regarding virtual reality enhanced the value of metaverse tokens, however this does not ensure the success of these endeavors. Samsung and Oculus, who are both owned by Meta, already have devices on the market, which raises questions about the possible influence of Apple’s upcoming products on VR adoption.
Inadequate usage data makes a sustained metaverse token rally improbable.
When Facebook rebranded as Meta in the fourth quarter of the same year, Metaverse enthusiasm likely peaked. The usage statistics of the two most popular metaverse platforms, The Sandbox and Decentraland, remained unimpressive throughout the price rise. Less than 5,000 unique active wallets (UAWs) communicated with the smart contracts on both platforms at their peak.
Since then, usage has decreased even more, with less than one thousand UAWs being used each day, indicating serious flaws.
Moreover, NFT sales for The Sandbox lands have not improved with comparable pricing and volume since the fourth quarter of 2022, despite the fact that token values have increased. It confirms that platform activity is often low.
Concerns about token dilution persist
Decentraland is also included as a creditor in Genesis’s previous week’s bankruptcy filing. According to court filings, the bankrupt lending institution owes Decentraland $55 million.
Genesis, on the other hand, according to Decentraland’s Discord, owes only $7.8 million. A community spokesperson noted, “The Treasury is healthy, and the credit amount does not represent a major component of the Foundation’s treasury.”
Since the Genesis issue has been known for a considerable amount of time, it is possible that the organization has already rectified it. It will, however, almost likely influence the already slow rate of its ecological expansion.
The SAND token, on the other hand, is susceptible to dilution until the end of Q3 2024 due to monthly unlocks. If market conditions do not better, some investors may consider selling their tokens.
As long as the technology has a chance of becoming a part of the future, the market will continue to value its early adopters despite any flaws. Long-term visions may be incapable of sustaining short- to medium-term rallies.
The Relative Strength Index (RSI) has overheated as a result of the unanticipated increase in volatility after days of low volatility. As the price has been trading against opposition from the FTX breakdown zone, the problem has become more complicated.
According to figures from Nansen, the inflows of MANA and SAND were $8.4 million and $12.6 million, respectively. It indicates that more investors choose to sell in response to a good breakout than to buy.
Nevertheless, according to data from analytics company Santiment, the recent increase in MANA was supported by a healthy volume, which is encouraging for buyers. To continue increasing, however, MANA/USD must break past the $0.735 barrier and support zone.
Similar trading conditions for SAND indicate resistance around approximately $0.93. If purchasers surpass these levels for metaverse tokens, we may anticipate a continuation of the surge. However, based on fundamentals and short-term risks, it is improbable that the price would above the barrier.
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