What happened

As the crypto market settles down from what's been a very volatile few weeks, investors are clearly viewing this sector as a means of taking a risk-on approach to the markets. The overall crypto market has continued its nice rally, surging more than 5% over the past week alone. That said, within the cryptocurrency sector, a number of tokens are providing significant outperformance today. 

As of 10 a.m. ET, three tokens that have vastly outperformed the market are Cronos (CRO 0.51%), The Sandbox (SAND 2.12%), and Axie Infinity (AXS 3.52%). These tokens have made 24-hour moves of 9.3%, 7.1%, and 21.4% respectively. 

Notably, Cronos, the native token of the crypto.com exchange, was among the most beaten-down cryptos following the collapse of FTX. Accordingly, today's rally may be an intimation that investor sentiment toward crypto exchanges is taking on a more bullish tone. 

The Sandbox and Axie Infinity, two popular blockchain-based metaverse games, have also seen speculative interest surge of late. In particular, today's incredible rally in Axie Infinity appears to be tied to a surge in trading volume following an announcement that it will move toward greater decentralization and community control of its strategic direction.

So what

Interestingly, all three of these crypto projects have ties to the metaverse. Cronos has also looked to get in on the action in the metaverse with the launch of the so-called CronosVerse and its first-ever metaverse party last month. Thus it appears most of today's rally in these three tokens is related to increased interest around crypto-based metaverse projects. 

Among the more speculative areas of the crypto market -- which is generally speculative enough for most investors -- blockchain-based metaverse projects have shown extreme volatility since their inception. Accordingly, among those looking for a way to gain outsize exposure to what could be a near-term rally, these tokens are generating significant interest. 

Now what

The metaverse has lost much of its luster among growth investors. Whether we're talking about stocks or crypto, the metaverse hasn't panned out as many were hoping. Thus, this is a space that's fundamentally difficult to value, given a lack of confidence around future growth rates. 

That said, with more broad-based bullish sentiment forming in the markets ahead of the upcoming Federal Reserve meeting next week, investors of all stripes appear to be looking for ways to play what could be a rip-your-face-off rally into the year's end. Seasonally speaking, this tends to be a strong time for risk assets. Thus, subsectors of growth that may outperform during this window is what many investors appear to be after right now.

Depending on an investor's time horizon, these metaverse tokens may be appealing. While I think this near-term rally may turn out to be just another bear market bounce, there's also the case to be made that if the metaverse turns out to be what many believers contend it will, there's some pretty impressive upside potential over the long term. So if you're wondering whether these tokens are investment-worthy right now, it's a question of your risk tolerance.