Why Metaverse Cryptos Axie Infinity, Decentraland, and Enjin Coin Plunged 20%+ Today

What happened

Top Metaverse Cryptocurrencies Axie Infinity (CRYPTO:AXS), Decentralized (CRYPTO:MANA), and Enjin Coin (CRYPTO:ENJ) were once among the most popular tokens in the crypto world. Today, that positive momentum hit a brick wall, with each of those tokens plunging more than 20%. As of 10:15 a.m. ET, these three tokens are down 20.8%, 20.1%, and 21.1%, respectively.

This selloff is a continuation of what we saw unfold on Friday. Most metaverse-themed cryptocurrencies are down more than 10%. However, an acceleration of these declines over the weekend is never a good thing.

The market seems to continue pricing in a short-term bearish outlook. Rising interest rates, inflation issues, and central bank digital currency issues are some of the major negative catalysts.

Image source: Getty Images.

So what

Crypto markets are active 24/7/365 – good for those who like consistent market action. However, during heavy sell-offs in the market, some investors might want the market to close for a few days.

Like many high-flying tech stocks (related to the Metaverse or not), Axie Infinity, Decentraland, and Enjin Coin have some truly head-scratching investors. On the one hand, the growth thesis with these assets is very easy to understand, as the metaverse concept promises to disrupt many large markets. Those looking at a few years or even decades down the road may see no reason to sell on short-term headwinds and hold on for the very long term.

On the other hand, these metaverse cryptos have exploded over the past year. With the market reassessing the risk associated with the entire crypto industry, it’s no surprise to see these tokens taking a big hit as well.

Now what

Going forward, investors considering buying this decline should consider the downside potential that may remain. Is it really possible that many of these high-flying 2021 tokens will see most of their gains evaporate this year? Or will the buying pressure eventually materialize to form a support base from which these tokens can continue higher?

At present, the outlook for even the most attractive and shiny metaverse cryptos is very uncertain. Nonetheless, this selloff is remarkable, and while we’ve seen other days in the past where most tokens have shrunk by double-digit margins on any given day, seeing so many quality tokens drop by 20% or more isn’t a big deal. is definitely not an average day.

Volatility is expected in the crypto world, but the current price action in the crypto market is truly extreme.

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

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