What happened
Today, crypto investors woke up to yet another bout of selling among major tokens. Along with most of those, high-flying metaverse cryptocurrencies Decentraland (MANA 4.94%) and Enjin Coin (ENJ 4.79%) declined 3.6% and 4%, respectively, over the past 24 hours, as of 2:30 p.m. ET today. Fantom (FTM 4.51%), a platform that has seen increased interest as a potential metaverse ecosystem, has seen even steeper declines, falling 4.9% over the same time frame.
So what
Decentraland and Enjin Coin are two crypto projects that investors generally consider to be leaders in the blockchain-based metaverse future. As of 9:30 a.m. ET, both tokens dipped dramatically, before recovering in similar fashion in late-morning and early afternoon trading.
Much of the recent decline among these high-flying cryptocurrencies has been attributed to a sentiment shift among growth investors in the crypto space. Whether it's simply profit-taking or risk aversion that's driving capital out of metaverse tokens and into other assets is unclear. However, momentum has not been favorable for either metaverse cryptocurrency of late.
Image source: Getty Images.
As mentioned, Fantom is more of an indirect participant in the metaverse-themed recent crypto rally. In October, it announced plans to expand the platform's metaverse exposure. Accordingly, this is a token that's generally followed the price action of top metaverse cryptocurrencies such as Decentraland and Enjin coin of late.
However, today, a decentralized finance project on the Fantom network, Grim, announced a hack that saw $30 million in crypto stolen. This also reduced the total value locked for Grim Finance from almost $100 million to just $4.2 million today.
Now what
Like other risk assets, high-flying cryptocurrencies have been caught up in what appears to be a mass de-risking of investor portfolios in recent weeks. It should be noted that these three metaverse-related tokens have had one heck of a year in terms of total return. Accordingly, taking a macro view of both the rise of the omicron COVID-19 variant, and a more hawkish monetary policy stance from central banks, investors may simply be looking to take their collective foot off the gas pedal. The high-profile hack of a key Fantom project certainly doesn't provide much in the way of a bullish case for investors, either.
Now, whether this sell-off ultimately proves to be a dip worth buying remains to be seen. For now, the market appears to be in wait-and-see mode. Accordingly, I expect more volatility rather than less heading into the first quarter of next year.
