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Why Metaverse Cryptos Decentraland, Alien Worlds, Enjin Coin Plummeted Saturday Morning

By Chris MacDonald – Dec 11, 2021 at 12:40PM

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Another early Saturday plunge took these metaverse cryptocurrencies down with the market.

What happened

The past two weeks have provided significant volatility for crypto investors late-Friday and early Saturday morning. This week, this sell-off permeated into the price action of various high-flying metaverse-related cryptocurrencies.

Popular metaverse coins Decentraland (MANA -0.10%)Alien Worlds (TLM), and Enjin Coin (ENJ -0.09%) all saw declines of 10.5% or more at their 24-hour lows this morning.

So what

These tokens have all recovered the vast majority, if not all of their losses, since this early morning decline. In fact, Decentraland is currently up around 2.3%, as of 12:15 p.m. ET, with Alien Worlds and Enjin Coin trading about flat over the past 24 hours.

Accordingly, there's certainly a strong case to be made that sentiment among various metaverse tokens remains strong. The metaverse is a fast-moving space, and one which investors remain honed in on. These periodic plunges appear to be "buy the dip" opportunities for aggressive investors, at least thus far.

A smiling gamer with a VR headset and a racing wheel.

Image source: Getty Images.

That said, each of these tokens remain well off their 52-week highs. Decentraland, Alien Worlds, and Enjin Coin have seen declines of 42%, 96%, and 48%, respectively from their yearly peaks. While dramatic, these tokens have been known to go parabolic from time to time, with longer intermittent periods of declines separating out larger moves.

Much of this decline has to do with high-profile expert discussion around the real-world utility created by blockchain-related metaverse projects. Concerns around the existing valuation metrics investors use to assess these tokens have some fundamental investors looking elsewhere for growth in the crypto world. Like stocks, cryptocurrencies can become overvalued as investors place too high of a value on the future earnings, or value created, by various tokens.

Now what

The extent to which metaverse-related cryptocurrencies are fairly valued or not is rather difficult to ascertain. On the one hand, the metaverse could provide a once-in-a-lifetime growth opportunity, of which these platforms provide early access. On the other, this space could turn out to be a flop, with the valuations these tokens have received being viewed in hindsight as ludicrous.

There's validity to both sides of the argument right now. Accordingly, the volatility we've seen with these metaverse cryptos could continue for some time, as price discovery takes place. 

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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