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The Sandbox Crypto Sinks as Investors Ponder Whether the Run Is Over for Metaverse Tokens

By Chris MacDonald – Dec 10, 2021 at 10:31AM

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The Sandbox is a hot place to play, but is the token overvalued?

What happened

As of 9:30 a.m. ET, The Sandbox (SAND 2.45%) had sunk 3.2% over the past 24 hours. This move comes on a relatively flat day in the crypto market.

This week, investors appear to have taken a cautious approach to top cryptocurrencies. The Sandbox is currently the 38th-largest cryptocurrency by market capitalization, but has seen an 18% decline over the past week on deteriorating sentiment.

A lone person playing in a sandbox.

Image source: Getty Images.

So what

The Sandbox has seen an impressive influx of interest this year, centering on this cryptocurrency's use as an in-game currency for The Sandbox metaverse game. The rise of the metaverse has propelled SAND to become a top-performing token this year, alongside tremendous momentum. Those in the crypto world seeking tokens with longer-term momentum-driven upside have sought out The Sandbox as a way to play this strength.

Essentially, SAND powers The Sandbox, a virtual "play-to-earn" metaverse game. Users can be creators and players, at the same time. And various NFTs and other digital assets can be bought and sold on this platform. Rather large purchases of digital real estate and recent high-profile developer interest in The Sandbox has continued to spur interest in the space, relative to other play-to-earn blockchain-based metaverse games.

However, there are questions around just how investors can take this rally. The bearish thesis with The Sandbox is growing stronger, with bears suggesting there's little real-world utility for SAND outside of the metaverse game. As a "true" cryptocurrency, The Sandbox may not pass the sniff test. Additionally, the fact that The Sandbox has run so far so fast suggests this is a token that has much further to fall in a potential bear market. 

Now what

There's certainly a strong case to be made that The Sandbox is a metaverse cryptocurrency with incredible potential to run from here. Investment in The Sandbox from users and real-world real estate developers has brought an influx of capital into this ecosystem. Should capital continue to flow into this space, there's really no telling how far this rally can go.

That said, as with any cryptocurrency, it's important to take note of the risks associated with any potential investment. Even with this existing surge in interest, The Sandbox remains approximately 40% below its all-time high. This is a token that's certainly in a bear market. While this is something that crypto investors may be accustomed to, investors appear to question the overall direction of risk assets right now. How this will play out for The Sandbox over the near, medium, and long terms remains to be seen.

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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