Crypto: Low Level Consolidation | markets

Volatility in the financial markets remains high. In the last two weeks, the trend has continued to point slightly downwards. The Vix index, which tracks the implied volatility of US equities, remains high and has risen somewhat recently. Investors are currently preoccupied with the bleak prospects of lower growth, rising commodity prices, tightening monetary policy, inflation and ongoing supply chain problems.

Inflation remains in focus. US data for May, released on Friday, was higher than expected by 8.6%. Inflation has thus risen slightly compared with the previous month. With this peak in 40 years, however, the peak in the United States could have passed.

In the euro area, price increases in May reached a record high of 8.1%. The European Central Bank announced at its most recent meeting last week that it would end its massive bond buying program in early July and raise the key interest rate by 0.25 percentage points. Further rate hikes were announced. The market, meanwhile, reacted negatively to the announcements.

The risk premium for Italian government bonds compared to German bonds has reached its highest level since April 2020. The so-called soft landing scenario, which is often predicted by central banks – a tightening cycle that slows high inflation while keeping growth intact – is currently considered unlikely by most market participants.

Following Terra Luna’s cryptocurrency debacle in early May, crypto markets have consolidated over the past two weeks. However, the release of US inflation data last Friday led to further price setbacks over the weekend. The total market value is currently almost 1 trillion. $. Relatively speaking, bitcoin is holding up best at the moment. Its share of the total market value of cryptocurrency has risen from 46% to 48% since the end of May.

Metaverse – more than a hype?

In short, Metaverse can be defined as a bridge between physical, real and virtual digital platforms. The concept of Metaverse is by no means new, and the concept comes interestingly enough from a dystopian novel from 1992. Basically, Metaverse can be seen as a linear development that comes with the advent of high computing power.

So-called MMORPGs – Massively Multiplayer Online RPGs – like Second Life, Minecraft or World of Warcraft have been around for almost twenty years. Recent iterations such as Sandbox or Decentraland have further developed the concept. While decisions in older generations were mostly made centrally by the game developers, Web 3.0 offers the opportunity to let society itself participate democratically in so-called DAOs (Decentralized Autonomous Organizations).

NFT and cryptocurrencies have also created the opportunity to monetize activity and ownership within Metaverse. Although the current versions of Metaverse are very popular among their target audiences, it is clear that Metaverse has not yet reached mainstream. Attending a virtual concert, buying real estate or holding a meeting in Metaverse may seem absurd to most of us. And yet this is actively pursued by an increasing number of users. For example, around 12.3 million fans watched artist Travis Scott’s concert virtually in 2020, and last year over $ 500 million was spent on virtual real estate on the top four Metaverse platforms.

Big brands rely on Metaverse

While critics see Metaverse as a looming social impoverishment, supporters argue that this new immersive world allows its users to build communities based on shared values. Cultural and geographical barriers are pushed into the background. Whether one considers this development to be right or wrong, it is difficult to deny the great commercial potential in the field. Not only Microsoft and Meta have acknowledged this. A number of brands like Nike (NKE 114.73 -3.26%)Cola (COW 61.41 -0.63%)Gucci, Hyundai (Hyundai Motor Rg ), Burberry has already established itself. Other companies like Disney (HAZE 99.40 -3.78%) has announced that they will build their own Metaverse.

A study by AnalysisGroup compares Metaverse’s growth path with growth in the mobile phone industry and concludes that Metaverse’s direct and indirect contribution to global GDP in 2031 could be around 2.8%. Of course, such studies should always be viewed with skepticism. Metaverse is still in its infancy. The quality of the graphics of the current market leaders can be improved, the virtual reality interaction is sparse, and the actual use of most applications and NFT is at least questionable.

What is encouraging, however, is that despite the daily fluctuations in the crypto market, investments from venture capitalists and large tech firms in Metaverse are significant. This can be seen as an indication of the extent of the long-term commitment in the field. Meta alone has already invested approximately $ 10 billion in the acquisition and development of hardware and software related to Metaverse.

Whether Metaverse will ultimately keep what it promises, or whether it’s just a fleeting phenomenon, can not be said from today’s perspective. If you take Gartner’s hype cycle as a benchmark, the impact of new technology is often overestimated in the short term, but tends to be underestimated in the medium and long term.

Leave a Comment