Why Sandbox (SAND) Is Up Over 14,500% This Year

This top-performing crypto has even outperformed Solana.

Sandbox (SAND) is one of several metaverse tokens that have shot to crypto fame in recent months. It is up 14,530% since the start of the year, making it one of the top performing cryptos of 2021. It even performed better than Solana (SOL).

If you'd bought $500 of Sandbox on Jan. 1, it would be worth over $73,000 today. So, how has Sandbox produced such eye-watering gains?

1. Metaverse tokens are all the rage

Facebook's decision to rename itself as Meta put everything metaverse related into the spotlight. Metaverse tokens like Sandbox, Decentraland (MANA), and Enjin (ENJ) all saw significant price increases.

Metaverses are virtual worlds where people can interact, visit galleries, shop, and do many of the things they can do in the real world. People can buy and develop land in these virtual worlds, whether it's for business or fun.

2. It launched The Sandbox Alpha

After four years in development, Sandbox opened the doors to its metaverse with an exclusive Alpha pass. Just 5,000 individuals could participate in its multi-week play-to-earn event and explore the Sandbox metaverse.

Those who weren't able to buy or win an Alpha pass can still explore a small part of the new world, including the Alpha HUB and three experiences.

3. It announced a string of partnerships

At the start of November, Sandbox completed a $93 million fundraising round led by SoftBank, which it said will help the platform scale and grow as a prime entertainment destination. Several big names invested in the project, including Galaxy Interactive, Polygon Studios, and Kingsway Capital.

Sandbox has partnerships with a number of high profile brands, such as Snoop Dogg who developed his own virtual mansion in Sandbox, and The Walking Dead, which created an in-game experience for players to discover.

Should you buy SAND?

ARK Invest's Cathie Wood says she thinks the metaverse will be a multi-trillion dollar opportunity, and it's clear Mark Zuckerberg believes metaverses are the future. But which metaverses are going to succeed? What role will cryptocurrencies play? If you agree that metaverses will be important and want to invest, be aware that it is still very early days. We just don't know how these virtual worlds will play out.

Speculation in the cryptocurrency industry can push prices to unsustainable highs, which is one of the reasons the market is so volatile and high risk. That makes it difficult to know whether a token is overpriced and on the brink of a tumble, or whether it might still increase.

Investors need to take a step back from the fear of missing out and excitement over the next big thing and evaluate how SAND might perform in the long term. It is unlikely to grow another 14,530%. But do you think it has room to grow more in the coming five to 10 years? How does it compare against its competitors -- including big companies like Meta -- and does it have the right management team in place to remain competitive?

It's worth downloading the Alpha Hub and entering part of Sandbox's virtual world. You can access several parts of its metaverse without spending any money, and it is a good way to get a feel for what the game does.

If you do want to invest, SAND is listed on several big U.S. cryptocurrency exchanges, such as Gemini, Crypto.com, and Kraken. Investors outside the U.S have several other options as well, such as Binance and KuCoin.

Bottom line

All cryptocurrency investments are risky and can be volatile, so only invest money you can afford to lose. It's also good to consider Sandbox in the wider context of the crypto market as a whole -- bear in mind that Bitcoin (BTC), which is the biggest crypto by market capitalization, has lost 30% of its value in the last month.

Ultimately, Sandbox has exploded onto the crypto market and even after its huge gains, the game could still have a lot of potential. But there are some caveats. A lot depends on whether the metaverse continues to attract attention. And whether Sandbox can maintain its position when Meta and other big corporations truly enter the space.

Emma Newbery owns Bitcoin, Sandbox, Decentraland, and Enjin. The Motley Fool owns shares of and recommends Bitcoin.