First Mover Asia: For the metaverse to be a $13,000,000 opportunity, many things have to change; Bitcoin Breaks Above $31,000

Citi report makes bold prediction, but major metaverse platforms struggle to attract engaged users; altcoins are mixed.

Hello. Here’s what happens:

Price: A late rise took bitcoin past $31,000 where it started the week.

Insights: A Citi report estimates the potential value of the metaverse at $13 trillion, but platforms are struggling to attract engaged users.

Technician’s opinion: The price rebounds were short-lived, indicating a loss of purchasing power.

Prices

Bitcoin (BTC): $31,285 -0.07%

Ether (ETH): $1,828 -1.5%

The biggest winners

Possess teleprinter Return DACS sector
Chain link CLUTCH +9.1% computer use
gimbal ADA +1.2% Smart contract platform
XRP XRP +0.8% Currency

The biggest losers

Possess teleprinter Return DACS sector
internet computer PCI −8.7% computer use
Solana FLOOR −7.4% Smart contract platform
Classic Ethereum etc −4.0% Smart contract platform

Bitcoin Rising Late to Back Above $31,000

Bitcoin bounced back above the $31,000 mark on Tuesday after the introduction of a federal cryptocurrency law that would address a number of key regulatory issues plaguing the industry. Ether and other key digital assets also rose in the afternoon, regaining ground lost earlier in the week.

The largest cryptocurrency by market cap was trading above $31,200 early Tuesday morning, roughly flat over the past 24 hours, but significantly higher than its temporary position below $29,300 on US exchanges. Bitcoin fell late Monday and continued to trade in a choppy range amid widespread investor concerns about inflation, geopolitical turmoil and the global economy.

Ether, the second largest cryptocurrency, recently dropped more than 1% and traded just above the $1,800 level. Other major altcoins were mixed with SOL above 7%, but LINK was up more than 8%. Sentiment remained bearish.

“The markets continue the long-term downward trend, but the recent favorable cryptocurrency law in the US provides short-term support as it proposes to reduce the unfortunately too large [Securities and Exchange Commission] in terms of jurisdiction over crypto,” James Key, CEO of web protocol 3 Autonomy Network, told CoinDesk.

Equity markets, which have swung up and down in recent days as investors consumed some bullish treats, as well as their recent bad news regime, climbed more than half a percentage point on Tuesday with the Nasdaq, S&P 500 and Dow Jones Industrial Average all up more than half a percentage point.

However, investors had cause for concern on Tuesday. The World Bank lowered its forecast for global economic growth for 2022 to 2.9%, from 4.1% in January. World Bank Group chairman David Malpass called the “risk” of stagflation “significant”. Later in the day, US Treasury Secretary Janet Yellen told the Senate Finance Committee she expected inflation to remain high. And less than three weeks after reporting disappointing first-quarter results, Target warned investors that revenues would plummet due to changing consumer behavior that caused inventory imbalances.

Many analysts expect the cryptocurrency bear market to deteriorate in the near future, and Key noted that past Bitcoin bear cycles have bottomed out after dropping 85% in value for at least 18 months. The current market has lost nearly 60% of its value since hitting an all-time high last November.

“I really doubt that’s the bottom,” Key said. “In addition, these previous cycles have all been in a long-term bull market for equities, when this is not true for the first time. When institutional investors reduce risk, “exotic” and risky assets like cryptocurrency are sold first, indicating that this time has the potential to turn into a worse bear market. †

markets

S&P 500: 4,160 +0.9%

DJIA: 33,180 0.8%

Nasdaq: 12.175%

Gold: $1,851 +0.6%

Knowledge

The metaverse struggles to attract engaged users

A recent report from Citi calculated the metaverse’s total addressable market value at $13 trillion.

If realized, it would be an impressive feat, given that the gaming market is worth just $180 billion, according to the gaming research firm NewZoo, and the PC gaming hardware market is just $5.7 billion.

For the most part, the Metaverse marketplace is just a lesser version of the gaming marketplace. Metaverse exchange-traded funds (ETFs), with their exposure to publicly traded cryptocurrency companies, have lagged behind their gaming counterparts in the market – despite being largely the same.

Citi says the $13 trillion figure comes from all “Internet-related revenue and that from displaced physical world activities.” This makes huge assumptions about the future of ecommerce, as it implies that all parts of the ecommerce stack will be disrupted by the metaverse.

This almost corresponds to the optimistic Augmented Reality (AR) mindset of the late 2010s. Mobile-centric was about to disrupt many parts of the Internet economy, from gaming to advertising.

But the AR space couldn’t generate usable unicorns. Blippar, a promising London-based startup that merged artificial intelligence (AI) and AR, went bankrupt in late 2018 after raising $37 million at a valuation of $1 billion.

The app promised to revolutionize e-commerce by allowing users to point their phone at any object and get all the information the app could gather from visual recognition and online searches. It can also be used to provide enhanced 3D visualizations of products that enhance online sales opportunities for retailers. It was all very interesting and promising new revenue models, but the user base never got off the ground.

Aside from Blippar, Magic Leap, which released promising first images that it never delivered, has sucked life into AR capital markets, stripping many promising AR startups of their resources to create this promised augmented reality. Despite the success of Pokemon Go, there just wasn’t another AR unicorn quite like this one.

Coming back to Citi’s metaverse predictions, much like the AR bull market in the late 2010s, something is missing: users. Data from the chain shows that despite the high ratings, metaverse majors struggle to build a user base, with some having a few thousand at most compared to the tens of millions of players playing on Steam or Xbox Live simultaneously.

And that’s not because they’re new platforms: PC gaming network Steam reached 1.5 million concurrent users six years after launch; Decentraland currently has less than 1,200 active users and has been open to the public for two and a half years.

We still have a long way to go before the metaverse becomes a $13 trillion opportunity.

Technician’s opinion

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

Bitcoin (BTC) remains in a choppy trading range as short-term indicators are neutral. The cryptocurrency could find support near $25,000 and $27,000 as the price continues to stabilize after last month’s sell-off.

BTC is down 4% in the past 24 hours.

The Relative Strength Index (RSI) on the daily chart has fallen back below neutral 50, indicating weak momentum behind recent price rallies above $30,000. On the weekly chart, the RSI is the most oversold since March 2020, which preceded a surge in cryptocurrency prices.

Nevertheless, the indicators may remain oversold for several weeks, especially in a downward price trend. This means that the upside potential for BTC may be limited, with immediate resistance at the 50-day moving average of $33,371.

Important events

1:00 PM HKT/SGT (5:00 AM UTC): Japan Eco-Watchers’ News/Outlook Survey (May)

17:00 HKT/SGT (9:00 UTC): Employment trends at Eurostat (QoQ/YoY/Q1)

The CoinDesk Consensus Convention kicks off on June 9 and will run for three days. The agenda and list of speakers can be found here.

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