Market Selling Hits These 3 Metaverse Cryptocurrencies Hard Today

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What happened

This morning, the equity and crypto markets are currently under intense pressure. Risk assets as a whole are reacting negatively to concerns that a new variant of the coronavirus found in South Africa could be the worst yet.

These concerns have spilled over into many of the top performing cryptocurrencies in recent times. In the crypto world, metaverse-related cryptocurrencies Decentraland (CRYPTO: MANA), Enjin Coin (CRYPTO: ENJ), and The Sandbox (CRYPTO: SAND) have all vastly outperformed their crypto counterparts in recent months. However, today the market has turned red even for these highfliers.

As of 10:30 a.m. ET, Decentraland, Enjin Coin and The Sandbox were down 9.7%, 10.2% and 5% respectively.

These tokens each hit daily lows of over 12% this morning, although they were in positive territory yesterday.

Image source: Getty Images.

So what

For cryptocurrency investors, one would think that the disruptive potential of these technologies may outweigh the risks of a larger economy. After all, one of the main reasons many investors hold cryptocurrency is for some form of market hedging.

However, it appears that capital flows to crypto are being affected by these concerns. Investors are apparently dismissing the growth prospects of many cryptocurrencies and blockchain projects today in the wake of this news.

The fact that the correlation between the crypto sector and other innovative high-tech stocks appears to be increasing is a trend investors will want to watch.

Now what

It remains to be seen how much another potentially disastrous chapter in this ongoing pandemic will be a headwind or tailwind for cryptos (and stocks for that matter) linked to the Metaverse. Indeed, one of the main drivers of many metaverse-related projects over the past two years has been the demand for virtual spaces for people to interact with.

However, in times of panic in the markets, capital tends to withdraw from risky assets. Another trend to watch out for is that capital outflows have infiltrated the crypto space.

Each of these three metaverse-linked cryptocurrencies certainly provides a compelling investment thesis for aggressive long-term growth investors. As a result, maybe this is the Black Friday sale that many were really hoping for.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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