Metaverse Investment: Opportunities and Risks in the Trillion-dollar VR Market

Metaverse Investment: Opportunities and Risks in VR

Compiled by: DeepChain

The metaverse continues to expand, with industry giants and upcoming players vying for a piece of the potential trillion-dollar pie. According to Cointelegraph Research’s venture capital database, nearly $2 billion was invested in blockchain-based metaverse transactions in 2022.

A McKinsey report from 2022 estimates that the metaverse industry could generate up to $5 trillion in revenue by 2030, exceeding Citigroup’s predicted $8-13 trillion. These estimates reflect significant growth in the global metaverse market, which was valued at $65.5 billion in 2022. To achieve these optimistic predictions, the metaverse industry needs to maintain an impressive 85% compound annual growth rate.

Investors will never guess which metaverse wins the Cointelegraph 2023 metaverse rankings. This blockchain-based metaverse has locked in over $61 million in value in its smart contracts and has over 8,000 monthly users.

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Stronger than ever

However, the metaverse landscape is not without its challenges. Market capitalization losses have plagued industry leaders, with Meta (formerly Facebook) losing 77% of its market cap equivalent to $800 billion from the end of 2021 to 2022. As a result, Meta CEO Mark Zuckerberg plans to cut 21,000 jobs in 2023.

Despite setbacks, industry giants such as Microsoft, Apple, Nvidia, and Qualcomm are all formulating their metaverse strategies. Apple’s entry into the metaverse is highly anticipated, with its AR/VR headset set to launch in June 2023. Similarly, gaming companies like Epic and Roblox leveraged pandemic lockdowns to their advantage, successfully launching metaverse concerts that attracted millions of people globally.

In 2022, metaverse mergers and financing increased from $13 billion in 2021 to over $120 billion, thanks to Microsoft’s $69 billion acquisition of Activision. The transaction had an EV/sales multiple of 7.6x and an EV/EBITDA multiple of 20.2x. Although valuation multiples are expected to decrease as interest rates rise, investment activity remains strong.

Top blockchain metaverse projects have also attracted a lot of funding. The leading blockchain metaverse, as measured by market cap, includes Sandbox ($1.02 billion), Decentraland ($905 million), and Axie Infinity ($830 million). Sandbox has a year-to-date (YTD) performance of 44%. Decentraland’s YTD is 62%. Neither have outperformed Bitcoin’s YTD of 68%.

For investors seeking exposure to the metaverse, ETFs such as Fidelity’s FMET and Roundhill’s METV offer viable options. However, new Cointelegraph research shows that most token trading in metaverse projects is driven by speculation rather than actual metaverse usage, a trend that requires cautious investment.

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