To those with only a scant understanding of the term “meta,” the hype surrounding Decentraland (CCC:MANA-USD) may seem ridiculous. In the eyes of such observers, its recent rally is entirely the product of Facebook re-branding itself as Meta Platforms (NASDAQ:FB).
Once said hype cools down? After its more than five-fold run-up since late October, it will give back most, if not all, of its gains. However, while this token, and the virtual world it’s used in as currency, seemingly has “fad” written all over it, you may not want to take a skeptical view of it right off the bat.
In fact, depending on your risk appetite, you may want to take a small, speculative position in it at today’s prices (around $4.24). With MANA-USD, there may be not just one, but two reasons why it could keep climbing.
As traders move out of pupcoins like Shiba Inu (CCC:SHIB-USD), they may make this the latest get rich play. Also, just like how altcoins such as Cardano (CCC:ADA-USD) have become some of the most valuable cryptos just on the prospect of increased future usage, the same thing could play out with Decentraland.
Admittedly, buying today is entirely a bet on the market’s near-term psychology. But meta mania may have far greater runway than it seems at first glance.
Decentraland, Meta Mania and What’s Next
Before diving into why this token could continue to climb, let’s take a look at its backstory. Of both the token itself, and the network behind it.
MANA-USD is the medium of exchange used in Decentraland. This virtual world, or metaverse, touts itself as the “first ever virtual world owned by its users,” with a DAO (decentralized autonomous organization) serving as its administrator.
So basically, it’s the blockchain era’s answer to Second Life. Running on Ethereum (CCC:ETH-USD), users can buy/sell virtual real estate within the metaverse, using the MANA token. NFTs (non-fungible tokens) are used to document ownership within the virtual world. Even before the aforementioned meta mania kicked off by Facebook’s latest move, this platform and its native token were catching on.
Now, as even casual observers are aware of it? It’s gone to the moon. But while this seems like a rocket ship that seems due to make a sharp descent back towards earth, it may be awhile before that happens.
2 Paths to Higher Prices
With a market capitalization of $7.2 billion at today’s prices, Decentraland looks like it’s gone up too far, too fast. After all, its usage hasn’t gone up five-fold in the span of a month. So why should its token price? This may be true. But it may not indicate that a massive pullback is just around the corner.
Again, there are two reasons why MANA-USD could stay on its current trajectory. First, the possibility of it becoming the next get-rich crypto play. Second, the prospect of traders further pricing in future increased usage, as seen with names like Cardano and Solana (CCC:SOL-USD).
Now, I know this first reason is really just “greater fool” theory. Hardly a rational way to put one’s money at risk. But as seen with Shiba Inu and its predecessor Dogecoin (CCC:DOGE-USD), it may be profitable to buy MANA-USD today on rumors it’s moving to higher prices tomorrow. Both Shiba and Doge sport $20 billion to $30 billion valuations today because of this factor. With enough buzz around Decentraland and a swath of potential buyers likely willing to stampede into it, I wouldn’t discount the prospect of moving up to this value before this trend fades.
As for the “anticipated increased usage” catalyst? At today’s prices, the crypto market values ADA-USD and SOL-USD (at around $60 billion each) largely on the basis that either one (or both) could someday give Ethereum (worth $490 billion) a run for its money. If more market participants believe MANA-USD could do something similar, as its metaverse becomes widely used, another triple-digit percentage rally may be in store.
The Bottom Line
Don’t get me wrong, MANA-USD is far from a slam-dunk trading opportunity in crypto. The metaverse, despite Facebook’s pivoting to it, may ultimately fail to gain critical mass. This may make it a questionable long-term play. But as a short-term trade, there may be some merit in buying it.
Pupcoin mania has peaked. Meta mania still has a bit of runway left. It may have room to make another big spike higher. While cautiously putting in only what you can afford to lose, you may want to consider Decentraland at today’s prices.
On the date of publication, Thomas Niel held a long position in Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.