Many of us probably remember the so-called “crypto winter” of 2018.
From the January 2018 peak of $692 billion, the total cryptocurrency market capitalization fell to $93.4 billion by April 2020. That marked an 86.5% decline. It was a painful time for digital asset investors.
Right now, we’re seeing a similar dynamic play out…
Bitcoin (BTC) has plunged 38% since January. Ether is down around 39%. And the market capitalization for the entire cryptocurrency market is down over 58% from its high in November 2021.
But while digital assets have fallen back, the major trends fueling the blockchain space aren’t slowing down. In fact, a new trend is on the verge of exponential growth… and it’s poised to change the way we socialize, work, transact, and more.
Enter the Metaverse
One of the most important investment trends I’m following right now is metaverse technology.
For new readers, the metaverse is a virtual world where people can meet and interact with each other. There will be many metaverses. And with the help of augmented reality (AR) and virtual reality (VR) technology, many people will enjoy a completely immersive experience.
And metaverses will also allow users to own digital assets called non-fungible tokens, or “NFTs.” NFTs are digital assets that are cryptographically secured and authenticated on a blockchain. We can think of these as digital collectibles.
Artwork, trading cards, exclusive video clips, poems, and similar items can all be “tokenized” and stored on a blockchain.
Metaverses will enable the convergence of AR/VR technology, NFTs, cryptocurrencies, and other digital assets across blockchain networks. They’ll allow people to attend live concerts… play games… shop… own property… and even do business with each other.
And what has happened in this space over the last year is simply remarkable…
Private capital sees the potential of this technology. And hedge funds and investment banks worldwide are building their stake as I write…
In Q3 and Q4 of last year, the NFT and gaming sectors of blockchain accounted for 43% of all deals.
That’s a significant sum once we understand that those two quarters accounted for $18.3 billion in capital.
And since the start of 2022, funding from venture capitalists has raised over $14.6 billion. That’s about 48% of all the capital investment last year.
At this rate, 2022 is poised to be one of the biggest years on record for blockchain gaming projects in general. And if we look back at the last five months, we can already see this shift underway in the latest metaverse projects to hit the blockchain…
The Metaverse Trend Is Accelerating
2022 has already proven to be a massive year for metaverses.
Popular metaverse games like The Sandbox and Decentraland have reported adding millions of users over the last five months alone. In fact, The Sandbox metaverse has now registered over two million users in the past 13 months.
These games enable users to interact in cartoon-like worlds complete with their own burgeoning economies.
And once inside the metaverse, we can find a whole economic environment with exciting incentives for users.
Today, there are thriving businesses and economies in metaverses like Decentraland. Shopping districts, casinos, and even private real estate are owned and developed by individuals.
This is an important point that few understand about metaverses. The usual reaction is that these are “just video games.” The important difference is that metaverses have economic incentives built in. There are assets that we can own, develop, and sell for a profit.
In fact, metaverse real estate is one of the most exciting investment targets I’ve been following alongside this broader trend. Metaverse real estate sales topped $500 million in 2021.
That number is expected to double this year. And one research firm estimates this market could grow at a compound annual rate of 31% per year from now until 2028.
With such high projected growth, it’s no wonder that some technology giants are trying to capitalize on this growing trend.
Meta/Facebook alone spent $10 billion building out its metaverse infrastructure last year, with even more planned for the following years.
And Goldman Sachs and Morgan Stanley estimate that the metaverse will be an $8 trillion opportunity as this trend develops.
There is enough capital flowing into this space that it should capture the attention of every investor.
And all this just shows that metaverses are more than video games for kids. They are unique digital worlds with their own economic incentives. And for some businesses, they are a whole new stream of revenue.
Of course, I understand that many of us may not want to spend all of our time in a metaverse…
I know it sounds nuts to many of us. We can’t imagine floating around in a metaverse akin to the kinds of games that our children or grandchildren might be playing.
It’s a natural reaction. With that said, two of the most important skills that I taught myself as an investor and analyst are:
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Never assume that because I wouldn’t do something or like something that others wouldn’t as well.
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Don’t fixate on the way things are done now. This clouds our vision of the future.
Even if we’re among those who can’t ever imagine participating in the metaverse, it’s still worth paying attention to. The implications for investors are massive.
And while it may seem like investing in the digital assets underlying these projects may be our first step, I’ve found another way to gain exposure to this larger trend…
Crypto Placements
The way we’ll see outsized returns in the years ahead is by investing in the private companies building out these projects. I call these investments “crypto placements.”
As my longtime readers know, I am an active angel investor. And of all my private investments, my largest area of focus is the blockchain and cryptocurrency space. I’ve invested in projects like Abra, Ripple Labs, and Coinbase, to name just a few.
And tonight at 8 p.m. ET, I’ll show readers how we can invest in these private cryptocurrency companies. I’ll also give details of my next private crypto recommendation in the weeks ahead.
If we’re interested in learning more, you can go right here to reserve your spot. I hope to see you there.
Regards,
Jeff Brown
Editor, The Bleeding Edge