First Mover Asia: Metaverse ETFs Underperform Gaming ETFs; Cryptos return to the red

Public interest in the metaverse continues to grow, but not so much in metaverse ETFs. Is crypto part of everything?

Hello. Here’s what happens:

Price: Bitcoin and most other cryptos are in the red again.

Insights: Metaverse ETFs struggle to keep up with gaming ETFs.

Technician opinion: BTC’s advantage seems limited, despite short-term support.


Bitcoin (BTC): $29,982 -3.4%

Ether (ETH): $2,030 -4.7%

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Bitcoin and other cryptos falter

It did not take long.

A day after bitcoin broke a week-long losing streak, the largest cryptocurrency by market cap and other major cryptos were back in the red on Monday.

Bitcoin has recently fallen more than 3% in the past 24 hours and has fallen for seven consecutive weeks. Still, it spent much of the day near or above the psychologically significant $30,000 level. “Over the past 24 hours, we have seen a six to eight week consolidation in sales,” Mark Connors, head of research at 3iQ Digital Asset, told CoinDesk.

The performance of Bitcoin and other cryptos has been consistent with stock markets, which fell slightly on Monday and have fallen since last fall as inflation and supply chain problems continued to mount and investors became more risk averse. The tech-heavy Nasdaq lost more than a percentage point on Monday.

Such a growing caution, sparked last week by the collapse of the stablecoin terraUSD (UST) and the luna token it backs, has especially rattled altcoins in the past week. On Monday, AXS and AVAX were recently down 12% and 8% respectively. SOL fell more than 6%.

Ether, the second largest cryptocurrency by market capitalization, fell more than 4.6% despite holding over $2,000.

“In stocks, you’ve lost almost a year of returns, so [there was] a quick reset as the Fed rose [interest rates] in the first week of May,” Connors said. “You saw digital assets, bitcoin, ether and the rest of the altcoins fall. What happened is there was a stabilization. What people judge is whether the rate hike has been suppressed. In our view, that is not the case.

Trading volume rose from lows in the early months of the year, a sign of a potential and at least temporary recovery. Few analysts predict a more permanent exit from the current bear market. The coming weeks could be particularly difficult for stablecoins, although Terraform Labs CEO Do Kwon has released a “recovery plan” to save the Terra network. Kwon offered to fork Terra into a new chain without UST.

Connors said investors are likely to see three to nine months of “jerky markets” and prices are likely to fall, possibly with support between $20,000 and $24,000. In this environment, he sees that investors are focusing more on Bitcoin and Ethereum. “Bitcoin dominance would and will happen when the markets sell out,” Connors said. “People are going for quality, but it seems that Ethereium is now emerging as the second quality asset in the ecosystem. †


S&P 500: 4,008 -0.3%

DJIA: 32,223 +0.08%

Nasdaq: 11,662 -1.2%

Gold: $1,824 +0.6%


Metaverse ETFs are struggling to keep up with gaming ETFs

Sometimes a fancy new investment vehicle, most recently the Metaverse, doesn’t perform as well in the market as last year’s model.

Metaverse exchange-traded funds (ETFs) arrived shortly after the term entered our lexicon last year and became a favorite among venture capitalists. Since the metaverse is simply a mashup of gaming and crypto, these metaverse ETFs are very similar to gaming or eSports ETFs (the two terms are synonymous), which were launched a few years ago.

They resemble them in that the metaverse is an ambiguous term; the shared online experience envisioned in Neil Stephenson’s sci-fi novel “Snow Crash” already exists on many multiplayer gaming platforms. Metaverse tokens don’t have proxies yet, so metaverse ETFs are compensating for that by setting up publicly traded cryptocurrency companies like Galaxy (GLX.TO) or Block (SQ), the former Square. And this is where the problem begins.

Roundhill Ball Metaverse ETF (TradingView)

This association with crypto means that METV, a metaverse ETF from Roundhill, is significantly underperforming ESPO, a gaming/eSports ETF from VanEck.

Gaming tech heavyweights like GPU designer Nvidia (NVDS) or game engine developer Unity are in both baskets and haven’t performed well all year, but Galaxy Digital’s inclusion – down more than 60% YTD and planning a share buyback -underperforming-gaming-etfs-cryptos-return-to-the-red-202205170033 – let the ETF metaverse really sinking.

Of course, this metaverse ETF outperforms the metaverse tokens themselves: Sandbox’s eponymous token (SAND) is down nearly 77% and Decentraland’s MANA is up 68%, mainly because both have struggled to attract a player base that their appreciation reflects.

There is an irony here. The metaverse, a way of selling crypto-plus gaming as a branded product, is doing better in the market than vanilla gaming itself.

Maybe crypto doesn’t belong in everything?

Technician’s opinion

1652748013 556 First Mover Asia Metaverse ETFs Underperform

Bitcoin’s daily chart shows support/resistance. (Damanick Dantes/CoinDesk, TradingView)

Bitcoin (BTC) is stabilizing around the $30,000 price level after last week’s sell-off. The cryptocurrency needs to stay above the $27,000-$30,000 support zone this week to generate a positive short-term momentum signal.

BTC is down 3% in the past 24 hours.

The Relative Strength Index (RSI) on the daily chart is rising from oversold levels, which may keep buyers active at support. The RSI is also oversold on the weekly chart, although negative momentum could limit upward price movements.

Immediate resistance is seen at $33,000 and $35,000 where a price breakdown occurred earlier this month. This suggests that a large number of sell orders could limit a rally in the next two weeks.

In addition, the recent underperformance of alternative cryptos (altcoins) relative to bitcoin suggests lower risk appetite among crypto traders. Due to their higher risk profile, alts tend to drop more than bitcoin during bear markets. The broader risk environment could keep BTC’s downtrend intact in the near term.

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