The precise bucket investors sort cryptocurrencies such as Axie Infinity (AXS -1.10%), Internet Computer (ICP -5.05%), Decentraland (MANA -2.08%), and The Sandbox (SAND -2.48%) into may vary. Some believe these are metaverse cryptos (a rather nebulous term to be sure), others Web3 plays, or simply applications that can be put into the decentralized finance (DeFi) bucket due to their transactional nature and ties to non-fungible tokens (NFTs) and other use cases.
That said, each of these four tokens surged over the weekend. Since 4 p.m. ET Friday, these cryptos are up 22.9%, 14.4%, 10.8%, and 10.2%, respectively, in today's afternoon session. Those double-digit gains are tied to continued bullish macro conditions, as well as a number of token-specific catalysts seen over the past few trading days.
What's driving this impressive performance?
Notably, Axie Infinity is among the leading tokens seeing large-scale purchases from large accounts, referred to as "whales" in the crypto community. Over the past 24 hours, nine transactions of more than $100,000 took place, with 19 such transactions seen during yesterday's session. These significant transactions signal serious investor interest in Axie Infinity and its play-to-earn decentralized application.
Positive on-chain development data, and improving sentiment following a token unlock, appear to be driving Internet Computer higher. Investors appear to like the outlook for Internet Computer in this environment, given the fact this project enables developers to build applications directly onto the blockchain. For those intrigued by the world of metaverse-focused decentralized applications, Internet Computer is one of the companies providing the behind-the-scenes plumbing to make this happen.
As for Decentraland and The Sandbox, two projects closely associated with the metaverse, it appears some bottom fishing is taking place in the market, with traders and value investors looking to pick up what may be viewed as cheap tokens near a market bottom. Following some negative regulatory news tied to the Securities and Exchange Commission's assertion that Decentraland and The Sandbox's native tokens are securities, both tokens made fresh multimonth lows. At these levels, there appear to be some willing parties ready to step in and add risk.
Can this momentum continue?
Like most crypto rallies, there's a decent amount of exuberance, or animal spirits, that need to be accounted for when thinking about any sort of fundamental factors that may have driven these tokens higher over a period of time. The recent rally we're seeing in these metaverse-related projects certainly exemplifies this, to a degree. As the broader crypto market shows some positive momentum, these higher-risk, higher-upside altcoins have seen larger moves (in many cases) than their mega-cap crypto peers.
That said, there are some rather intriguing fundamental catalysts that may warrant some attention from investors. If users come back to this space, due to rising crypto prices or for other reasons, these tokens could have more fuel to surge higher. We'll just have to see how the data supports this recent rally, if at all.
