Reports show Metaverse, the killer narrative of 2021, is the biggest loser in the crypto sector this year.
Metaverse Oversees 89% Decline Through 2022
According to a year-end report by Arcane Research, both layers of the alternative 1s craze and last year’s Metaverse hype fell sharply in 2022. Here’s a chart showing how some of the biggest narratives of 2021 played out this year:
The year-to-date drawdowns of some of the digital asset sectors | Source: Arcane Research's 2022 - Year in Review
As shown in the chart above, privacy coins performed the best of all market segments this year, but the sector still suffered a significant loss of around 47%. The report notes that the privacy coin is higher than the others, likely due to Monero’s continued utility in darknet transactions. Year on year, XMR itself is down 35%.
The biggest loser of the year was Metaverse, with the sector experiencing a massive 89% pullback since the start of the year. It seems that all the hype around the mythical digital parallel world cannot survive this harsh bear market, despite all the momentum seen last year.
Meta, one of the biggest supporters of Metaverse, has also done poorly since the company changed its name from Facebook and moved to the next level of the internet. The company also engaged in mass layoffs earlier this year.
Alternative layer 1s, another hot topic in 2021, found itself the second worst player in the market, which is above Metaverse in terms of returns (-85%) when excluding BNB Binance. Layer 1 is a blockchain that is independent from the rest (that is, not built on other chains), and can host a smart contract ecosystem. “Alternative” here naturally refers to layer 1 outside of Bitcoin and Ethereum.
BTC and ETH themselves have had historically bad years, seeing drawdowns of 65% and 68%, respectively. Interestingly, the exchange token has outperformed both, as it has a negative return of 57% when excluding the FTT FTX token, and 58% when including it.
However, it appears that BNB is doing most of the hard work to get the exchange token to surpass Bitcoin and Ethereum, because without the token it is 73% underwater. For 2023, Arcane Research predicts that these exchange tokens will “face serious regulatory scrutiny due to the collapse of FTX, and certain tokens will be labeled as securities.”
The price of BTC
At the time of writing, Bitcoin is trading around $16,500, down 2% over the past week.
Looks like the value of the crypto has declined during the last few days | Source: BTCUSD on TradingView
Featured images from Art Rachen at Unsplash.com, charts from TradingView.com, Arcane Research