The virtual real estate market is collapsing, despite a McKinsey report predicting a $5 trillion market by 2030.

The Metaverse sector is experiencing its own real estate crisis moment due to a sharp drop in the prices of its virtual lands in 2022, driven by falling user interest and a bear market in cryptocurrencies.

Land sales fell by 85% in 2022
In particular, Metaverse projects built on the Ethereum blockchain, including Sandbox and Decentraland, have seen significant declines in their scores and other key metrics, data from WeMeta shows.

For example, in February 2022, the average price of land sold in Decentraland peaked at $37,238. But since August 1, their value has fallen to an average of $5,163. Similarly, The Sandbox’s average selling price fell from about $35,500 in January to about $2,800 in August.

The average selling price of virtual plots in the Ethereum metaverse projects. Source: WeMeta
Overall, the average price per piece of virtual land across Ethereum’s six major Metaverse projects fell from around $17,000 in January to $2,500 in August, or 85%.

Decreasing the size of the metaverse
Poor lot sales volumes also indicate declining user interest in Metaverse projects.

On a weekly average, the volume fell, i. H. the amount of land sold (received in currency), from a peak of $1 billion in November 2021 to about $157 million in August 2022.

Sales volume of land in Metaverse. Source: WeMeta
At the same time, market valuations of the Metaverse tokens in circulation have fallen by more than 80%, helped by a broader decline in the cryptocurrency sector due to unfavorable macroeconomic conditions.

For example, the market value of Decentraland MANA tokens in circulation fell from $10 billion in November 2021 to $2 billion in August 2022. Similarly, the net capitalization of Sandbox SAND reached $8.4 billion over the same period to approximately $1.78 billion.

Metaverse ETF also fails
Meanwhile, exchange-traded fund Roundhill Ball Metaverse (METV) is collapsing along with blockchain-focused Metaverse projects. The ETF gives investors exposure to companies using Metaverse in their growth strategy.

On the daily chart, METV is down nearly 45% from its all-time high of $17.11 in November 2021, with stock portfolios of companies like Meta (formerly known as Facebook) and Snap posting significant losses in the second quarter.

Daily METV price chart. Source: Trade View
However, according to a recent McKinsey report, corporations, venture capital funds, and individual investors invested more than $120 billion in the Metaverse sector between January and May 2022, more than double the $57 billion invested in all of 2021 .

On the topic: Facebook metaverse will fail, says Vitalik Buterin

However, despite the downturn in the Metaverse market, McKinsey believes space could be a $5 trillion sector by 2030, noting that e-commerce is likely to impact the market by only $2 trillion to $2.6 trillion will be followed by the academic sector of Virtual Learning. , impacting $180 billion to $270 billion.

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Source: CoinTelegraph

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