The amount of interest in non-fungible tokens (NFTs) and the metaverse in South Korea appears to have passed the tipping point. Recently Seoul announced a five-year-plan to build a public metaverse platform while a book explaining NFTs became a bestseller.
Another data point for the popularity of NFTs is how video game developers’ share prices grew exponentially as they proclaimed their new adventures in NFTs and the metaverse. Last week, however, as the same gaming share prices plunged with the Bitcoin crash, many are left wondering whether NFTs and the embrace of everything blockchain are a bubble that has burst.
The price of Bitcoin experienced great volatility over the weekend, dropping more than 20% last Friday, Asia time, falling below US$50,000 for the first time since October. The plunge was part of a global market downturn goaded by the emergence of the Omicron variant of Covid-19, China’s continuing Evergrande uncertainty and fears of the rise and persistence of inflation in the U.S.
“People moved their money away from risk equities into the safer U.S. dollar as they expected the U.S. to begin its tapering next March,” said Kim Dae-jong, professor of business at Sejong University, in an interview with Forkast.News. Kim believes Charlie Munger’s rant against cryptocurrencies also played a big part.
Apart from Bitcoin, many other altcoins, including the metaverse and GameFi tokens Decentraland’s MANA and Axie Infinity’s AXS, were also affected. The market capitalization of the two cryptocurrencies fell over 20% last week, and are down around 36% from their all-time highs in November. This week, however, Bitcoin and the two game tokens began to recover.
What have not recover yet are the stock prices of South Korean game developers that jumped into NFTs and the metaverse.
Wemade, the video game developer of the play-to-earn (P2E) NFT game MIR4, dropped 10.2% in price on the stock market on Monday, and fell another 3.4% the next day. Wemade’s stock price dwindled more than 30% in less than a month from its all-time high in November.
Wemade became the go-to asset for investors who were seeking to profit in blockchain technology. Its MMORPG (massively multiplayer online role-playing game) MIR4’s global version successfully adopted the P2E system by rewarding players with exchangeable NFTs. It is currently the sixth most-popular game on the Steam platform, with more than 85,000 concurrent players. It also announced a goal to release a hundred blockchain-based games by next year.
But its success and ambition could not save it from the Bitcoin selloff and global market downturn. Wemade shares are priced at 156,000 Korean won according to Investing.com, down from a high of 237,000 Korean won (US$ 201) in November.
Shares of other significant game developers that recently announced NFT developments, such as Gamevil, Kakao Games and Pearl Abyss, also continued to plummet from last Friday. They fell by 30.9%, 22.3% and 18.7%, respectively, from their peaks.
Local media reports that the drop is a reminder that blockchain-induced assets are still very high-risk. But Kim says he is not worried about the current market dip.
“There is original value in NFTs and the metaverse, and that value has already been widely acknowledged,” he said, adding that, “Anything well-crafted will continue to survive no matter the circumstances.”
