Renowned investor Warren Buffett once said, "Be greedy when others are fearful." And with the crypto market down roughly 40% to $1.3 trillion year to date, now could be a good time for investors to shop around for quality assets trading at a discount. Let's explore why Avalanche (AVAX 0.87%) and The Sandbox (SAND 0.70%) should be on your radar.
Avalanche is a blockchain designed to host decentralized applications (dApps), self-executing programs that offer services on the network. It has faced near-term headwinds because of its association with the failed stablecoin platform Terra. But this challenge doesn't kill its long-term growth thesis.
In early May, the U.S-dollar-tracking cryptocurrency TerraUSD lost its peg, triggering a collapse in its complementary token LUNA, designed to absorb the stablecoin's volatility. Avalanche has also taken a hit because Terra's developer, via the Luna Foundation Guard (LFG) (an organization that held digital assets to help prop up Terra's peg), holds around 2 million AVAX tokens -- stoking fears that it could unload the position to pay for real-world expenses such as taxes or possible litigation.
But with almost 270 million AVAX in circulation, the sale of LFG's holdings probably won't have a significant impact on Avalanche, aside from bad press. And investors should keep a long-term perspective.
Unlike most blockchains, Avalanche is naturally deflationary. The platform has a fixed maximum supply of 720 million AVAX tokens and burns (removing from circulation) all its transaction fees. So far, it has burned roughly 1.8 million units of AVAX worth $55 million. This mechanism should help boost the token's price over the long term -- although it will depend on demand increasing or remaining stable, which isn't guaranteed.
2. The Sandbox
Is the metaverse overhyped vaporware or a once-in-a-lifetime investment opportunity? Only time will tell. But however the concept turns out, blockchain technology is already playing a role in its development. Investing in The Sandbox is a great way to bet on this trend because of its early mover advantage in the industry.
Some major financial institutions are optimistic about the metaverse. Analysts at CitiBank believe the opportunity could be worth a jaw-dropping $13 trillion by 2030, becoming the "next generation" of the internet. Cryptocurrencies like The Sandbox are well suited to benefit from this trend through technologies like non-fungible tokens (NFTs), which are a secure means of establishing ownership of digital assets.
The Sandbox boasts a portfolio of over 166,000 plots of digital real estate called LANDS where individual users can build games and other digital experiences. And as one of the first crypto projects to show tangible progress in building a blockchain-based metaverse, it has attracted significant real-world interest.
In May, Dubai's Virtual Assets Regulatory Authority announced plans to open a headquarters within The Sandbox to engage with crypto-related companies seeking to operate in the jurisdiction. This is a massive vote of confidence in the platform that could attract more investment.
Timing the market?
Investing in a bear market is tricky because it's hard to call the bottom. But time in the market tends to be more important than timing the market. And while investors may want to wait a few months for the dust to settle, Avalanche and The Sandbox could make great long-term bets because of their unique designs and expanding market opportunities.