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Metaverse land flipping profitability diminishes as profits plummet in Q2

Metaverse land flipping profitability diminishes as profits plummet in Q2

The Sandbox (SAND) was one of the metaverse platforms that witnessed peak activity of interest in investing in metaverse land after Facebook rebranded itself Meta (NASDAQ: META) in October 2021. 

In particular, the most aggressive round of profit taking from ‘LAND flipping’ on the platform occurred on November 24th, 2021, about one month after the announcement of the Meta rebranding. Since then, overall trading profits have seen a precipitous decrease as a whole, according to a report by Messari on July 26.

Furthermore, between January 2020 and the whole of 2021, market participants saw a total of 19 days in which the aggregate land transactions resulted in a loss (Dec. 31, 2021, having the largest negative balance). Traders, on the other hand, have already suffered 23 days of aggregate losses in only the first half of 2022.

LAND flipping profitability decreases in Q2. Source: Messari

Since November 2021, the monthly profitability has dropped for seven consecutive months; meanwhile, the number of negative trading days began to climb in March 2022 and hit its highest in June 2022 as Q2 experienced the worst losses.

The number of days on which total trading volumes have resulted in a net loss has significantly increased as a consequence of the current volatility in the market. As a result of the widespread decline in the crypto market, flipping metaverse land real estate is far less of a “sure thing” than it once was.

Digital land is still in its infancy

Inherently, the provision of immersive experiences inside The Sandbox has the potential to function as a catalyzing agent for the long-term production and acquisition of value. 

Users are anxiously anticipating the advent of immersive crypto-consumer game experiences in this way. When it comes to creating immersive virtual reality experiences, creators are in a great position to do so. 

For the purpose of capturing that value, owners may choose to purchase certain land parcels with the expectation that the hosting of virtual experiences on those land parcels would, in turn, lead to an increase in the number of users engaging with those virtual experiences. 

It is possible that this might lead to the widespread adoption of immersive experiences, which in turn would increase the value of LAND parcels in the long run.

Metaverse real estate sales to grow over $5 billion by 2026

As the metaverse develops into a reality that is more tangible and vivid, a growing number of people will have an interest in taking part in the social ecology that it entails. It is anticipated that this tendency will have an impact, in particular, on the market for real estate investment in the metaverse.

Indeed, the value of the metaverse land market is expected to continue rising at an exponential pace with sales to grow by over $5 billion by 2026 according to a worldwide market study conducted by Technavio.

Interestingly, in May 2022, Finbold reported metaverse fans were paying $300,000 for a virtual property instead of buying a real house.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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