Metaverse investments: Opportunities and risks of the trillion-dollar VR market

Approximately $2 billion was put into blockchain-based metaverse ventures in 2022, as per Cointelegraph Research’s Venture Capital Database, as the metaverse continues to broaden with both large firms and new players competing to take advantage of the possibly trillion-dollar market.

A 2022 report from McKinsey predicted that the metaverse industry could generate as much as $5 trillion in revenue by 2030, a figure later surpassed by Citi’s projection of between $8 trillion and $13 trillion. This reflects a substantial increase from the $65.5 billion recorded in 2022. To realize these optimistic estimates, the metaverse industry must maintain a remarkable 85% compound annual growth rate.

Investors may be surprised to discover that the blockchain-based metaverse that won Cointelegraph Research’s 2023 Ranking of Metaverses has more than $61 million worth of value locked in its smart contracts, over 8,000 monthly users, and a deflationary token model. If you wish to learn more about this project, check out Cointelegraph Research’s new “The Hitchhiker’s Guide to the Metaverse” report.

Obtain the report from the Cointelegraph Research Terminal.

Stronger than ever

Despite its projected growth, the metaverse space faces some difficulties. Executives in the industry have seen a dramatic decrease in their market capitalizations, with Meta (previously known as Facebook) losing a staggering 77% of its market cap, which is equivalent to $800 billion, between late 2021 and 2022. Consequently, Meta CEO Mark Zuckerberg has decided to cut 21,000 jobs in 2023.

Despite facing difficulties, tech giants such as Microsoft, Apple, Nvidia, and Qualcomm are all formulating plans about the metaverse. People are eagerly awaiting Apple’s entrance into the metaverse, with their AR/VR headset set to be released in June 2023. Additionally, gaming companies like Epic and Roblox took advantage of the pandemic lockdown to host metaverse concerts that were seen by millions worldwide.

In 2022, mergers, acquisitions, and financing within the metaverse sector experienced a dramatic surge from the $13 billion recorded in 2021, reaching over $120 billion, thanks to Microsoft’s $69 billion purchase of Activision. The transaction had a 7.6x enterprise-value-to-sales ratio and a 20.2x enterprise-value-to-EBITDA multiple. Despite the expectation that the valuation multiples will decline as interest rates climb, investments remain strong.

The top blockchain metaverse projects have received considerable investment. According to market capitalization as of now, The Sandbox ($1.02 billion), Decentraland ($905 million), and Axie Infinity ($830 million) are the leading blockchain metaverses. The Sandbox has increased by 44% year-to-date, while Decentraland’s YTD performance is 62%. Neither of them have outdone Bitcoin’s YTD return of 68%.

For investors interested in gaining exposure to the metaverse, exchange-traded funds such as the Fidelity Metaverse ETF and the Roundhill Ball Metaverse ETF are viable options. Nevertheless, the “The Hitchhiker’s Guide to the Metaverse” report from Cointelegraph Research has revealed that the majority of token transactions related to metaverse projects are due to speculation rather than actual usage within the metaverse, which should be taken into account when investing.

The research staff of the Cointelegraph.

Cointelegraph’s Research department is made up of some of the most knowledgeable people in the blockchain industry. Their research team is composed of experts from the fields of finance, economics, and technology to generate the most reliable source of industry reports and insightful analysis. To ensure accuracy, the team utilizes APIs from multiple sources.

The article provides general information only and does not constitute advice or recommendations for any individual or any specific security or investment product.