What happened
This morning, the stock markets and cryptocurrency markets are currently under intense pressure. Risk assets as a whole are reacting negatively to concerns that a new coronavirus variant found in South Africa could be the worst yet.
These concerns have affected many of the top performing cryptocurrencies of late. In the world of cryptocurrencies, cryptocurrencies related to the metaverse Decentraland (CRYPTO: MANA), Enjin Coin (CRYPTO: ENJ), and The sandbox (CRYPTO: ARENA) All have outperformed their crypto peers by a wide margin in recent months. However, today the market has turned red even for these steering wheels.
As of 10:30 a.m. ET, Decentraland, Enjin Coin, and The Sandbox were down 9.7%, 10.2%, and 5%, respectively.
Each of these tokens hit daily lows of over 12% this morning, despite being in positive territory yesterday.
Image source: Getty Images.
And that
For cryptocurrency investors, one might think that the disruptive potential of these technologies may outweigh any risks to the broader economy. After all, one of the key reasons many investors hold cryptocurrencies is as a form of market hedging.
However, it appears that capital flows to cryptocurrencies are affected by these concerns. Investors are apparently discounting the growth prospects of many cryptocurrencies and blockchain projects today as a result of this news.
The fact that the correlation between the cryptocurrency sector and other innovative high-tech stocks appears to be increasing is a trend that investors will want to watch out for.
Now what
It remains to be seen to what extent another potentially disastrous chapter in this ongoing pandemic will be a headwind or a headwind for metaverse-related cryptocurrencies (and stocks for that matter). In fact, one of the key drivers of many metaverse-related projects over the course of the past two years has been the demand for virtual spaces for people to interact.
However, in times of market panic, capital tends to move out of risky assets. The fact that capital outflows have leaked into the crypto space is another trend worth watching.
Each of these three metaverse-related cryptocurrencies certainly provides a compelling investment thesis for aggressive long-term growth investors. Consequently, perhaps this is the Black Friday deal that many have been waiting for.
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Chris MacDonald it has no position in any of the aforementioned stocks. The Motley Fool has no position in any of the listed stocks. The Motley Fool has a disclosure policy.
Points of view and opinions expressed in this document are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
