What happened

Today, popular metaverse cryptocurrencies The Sandbox (SAND 1.29%)Alien Worlds (TLM) and Enjin Coin (ENJ 0.18%) are each down today. As of 2:30 p.m. ET, these three metaverse tokens were down by 4.7%, 7.9%, and 6.5% in 24 hours, respectively. They all dipped more than 9.5% earlier in Thursday's trading session.

Despite impressive momentum among metaverse-related assets (cryptocurrencies can certainly be included in this group), these three tokens appear to be feeling the effects of market-related headwinds today.

Concerns that the Omicron variant of COVID-19 would eventually be found in the U.S. were confirmed yesterday, sending most higher-risk assets lower on the news. Additionally, recent news that the Federal Reserve is looking at tapering of its bond-buying program faster than expected isn't helping valuations across most asset classes this week.

Volatility in the broader cryptocurrency market appears to have left no prisoners today, with even the highest-flying sectors hit by this news.

Person wearing virtual reality goggles.

Image source: Getty Images.

So what

The fact that Metaverse-themed cryptocurrencies were unable to escape the selling pressure of the broader market is not necessarily something to be worried about. After all, each of these cryptocurrencies has risen dramatically over the past month. Enjin Coin is still up 32% from its 30-day lows, and that's the weakest performer of my Metaverse group. The Sandbox has tripled in a month.

There are a number of catalysts for this upward price momentum. This week, news of a record purchase of digital land on The Sandbox for $4.3 million spurred investor interest in inflation among digital real estate. Additionally, a high-profile report from Grayscale suggested the total market value of the metaverse could be more than $1 trillion. Any digital currency with connections to this gigantic market can soar on these lofty estimates.

Now what

The Sandbox, Alien Worlds, and Enjin Coin are three metaverse cryptocurrencies that present investors with exposure to a hyper-growth space with a tremendous amount of momentum right now. These recent large virtual land sales suggest strong upside, despite near-term price weakness.

However, concerns that momentum could be cooling off more permanently among higher-risk assets is something investors are considering right now. Given the amount of capital that's flown into these three tokens, it's entirely possible this sell-off could be more protracted. For now, we'll have to wait and see.