Real-world conflict hits the virtual world, metaverse cryptocurrencies plunge 12%

The metaverse, a place folks go to escape real-world turmoil, is also under attack right now.

| More on:
A stock market chart on a red background with an arrow going down, indicating a falling share price.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

The intense fighting picking up between Russia and the Ukraine has sent shockwaves through financial markets. This real-world conflict has led to mass selling across a range of sectors many investors may think shouldn't be affected, including metaverse-related tokens. However, as of 12:30 p.m. ET, Axie Infinity (CRYPTO: AXS)Decentraland (CRYPTO: MANA), The Sandbox (CRYPTO: SAND), and Enjin Coin (CRYPTO: ENJ) have plummeted 14.3%, 12.9%, 12.2%, and 16.4%, respectively, over the past 24 hours. 

So what

Notably, metaverse-related cryptos have been among the biggest winners from the fourth-quarter rally last year into anything metaverse related. This sharp increase in value has led to intense profit-taking by some investors worried about how capital flows may be disrupted by Russia's invasion of Ukraine. Indeed, this catalyst is likely to affect both equity and crypto markets further, as investors look to de-risk their portfolios.

Sentiment within the risk-on crypto sector remains on the "extreme fear" end of the spectrum, according to multifactorial market sentiment analysis for this sector. This gauge has been creeping lower in recent days, suggesting investors are more interested in minimizing risk than maximizing return. However, this gauge typically provides a good baseline for when the market is primed for buying opportunities, which may result in periodic rallies, should sentiment shift in the market in the coming weeks. 

Now what

As highly volatile assets, cryptocurrencies carry an inherently higher level of risk relative to other investment opportunities. For metaverse tokens that have already appreciated in value so significantly in such a short period of time, it appears investors are keen to take profits or trim losses, on fears the market may take a long time to recover from this. 

Right now, there's a tremendous amount of uncertainty shaking investor confidence in these tokens. Perhaps long-term investors can look at this turmoil as a buying opportunity. That said, there are likely many more investors who may take the perspective that more downside is likely on the horizon. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

Hand with AI in capital letters and AI-related digital icons.
International Stock News

5 Leading Tech Stocks to Buy in 2025

Technology stocks have been the driving force in the market for more than the past decade.

Read more »

Arrows pointing upwards with a man pointing his finger at one.
International Stock News

These 3 tech stocks are unstoppable monsters

These technology heavyweights still have years of upside ahead of them.

Read more »

Delighted adult man, working on a company slogan, on his laptop.
International Stock News

Is Nvidia a no-brainer bargain buy right now?

Nvidia is probably the hottest artificial intelligence stock on the planet.

Read more »

Hologram of a man next to a human robot, symbolising artificial intelligence.
International Stock News

Nvidia CEO Jensen Huang thinks Tesla has a multitrillion-dollar artificial intelligence (AI) opportunity up its sleeve (Hint: it's not robotaxi)

Tesla has several ambitions rooted in artificial intelligence (AI) to grow beyond the core car business.

Read more »

AI written in blue on a digital chip.
International Stock News

Better artificial intelligence stock: Palantir vs. Nvidia

Here's a look at Palantir and Nvidia to arrive at an answer.

Read more »

Couple watching Netflix.
International Stock News

Should you buy, sell, or hold Netflix stock in 2025?

The streaming stock is up an impressive 38% in 2025.

Read more »

asx shares involved with cloud tech represented by illuminated cloud on circuit board
International Stock News

Prediction: Amazon stock will soar over the next 5 years. Here's 1 reason why.

Amazon stock has been an incredible wealth builder for early investors who held on for many years.

Read more »

A woman in jeans and a casual jumper leans on her car and looks seriously at her mobile phone while her vehicle is charged at an electic vehicle recharging station.
International Stock News

Where will Tesla stock be in 10 years?

Let's take a look.

Read more »