The metaverse has made a name for itself in 2021, and it is surely a major component of the future of social media and entertainment. Still though, even with billions of dollars of support backing this fledgling industry, there are speed bumps to maneuver. Unfortunately for metaverse developers, though, these speed bumps aren’t limited to coding errors or content shortages; rather, issues are starting to sprout from other projects’ pratfalls. Today evidences the new development for the industry, as metaverse cryptos show volatility resulting from Meta Platforms’ (NASDAQ:FB) earnings rout.
Decentralized metaverse projects and centralized ones are more closely linked than they would like to admit. Decentralized projects, located on the blockchain, seek to carve out the lion’s share of the market by allowing users themselves to make the rules and govern themselves. These are more grassroots projects, typically, beginning with a small development team and hopefully securing some funding along the way.
Centralized metaverse projects, on the other hand, are those of tech titans like Meta Platforms, Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL). These projects have a multi-billion-dollar backing out of the gate and armies of professional developers. They present cleaner projects, at the expensive of user governance and freedom from censorship.
These two sects of the metaverse world couldn’t seem further apart. However, this week is showing that they’re closer than investors think. Indeed, as Meta Platforms reports its first earnings since pivoting full-time to its virtual reality project, the news is permeating into metaverse cryptos.
Metaverse Cryptos Show Volatility Fueled By Meta Platforms’ Earnings Misstep
Metaverse cryptos are showing volatility, and it’s through no fault of their own. It looks like blockchain-centric projects are unable to distance themselves from the more corporate players. Now, Meta Platforms is dragging these projects down.
Indeed, Meta reported its earnings on Wednesday; the report was the company’s first since its rebrand from Facebook and pivot emphasizing the metaverse space. Things did not go very well for the company. Reporting weaker revenue figures than analysts expected, the company also lowered its expected revenue for Q1 of 2022.
The disappointing earnings is tanking FB stock; the company is losing a jaw-dropping $232 billion in market capitalization in the aftermath of the report. And the punishment isn’t only affecting FB stock, it’s translating to metaverse cryptos’ losses this week.
As news of Meta’s report made the rounds, Decentraland (CCC:MANA-USD) shaved 10% from its value. Meanwhile, peer project Sandbox (CCC:SAND-USD) saw a 12% drop. Axie Infinity (CCC:AXS-USD) is the worst hit of the bunch, losing 13%. It’s worth noting, though, that while FB stock continues to trade down, these plays are largely in the green today.
As CoinDesk reports, leading experts believe that Meta will continue to influence the values of metaverse cryptos as well; as the leader of the corporate metaverse push, investors will use the company’s success to judge the potential of blockchain plays.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.