Bitcoin crash drags down South Korean NFT game stocks

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The amount of inter­est in non-fun­gi­ble tokens (NFTs) and the meta­verse in South Korea appears to have passed the tip­ping point. Recent­ly Seoul announced a five-year-plan to build a pub­lic meta­verse plat­form while a book explain­ing NFTs became a best­seller

Anoth­er data point for the pop­u­lar­i­ty of NFTs is how video game devel­op­ers’ share prices grew expo­nen­tial­ly as they pro­claimed their new adven­tures in NFTs and the meta­verse. Last week, how­ev­er, as the same gam­ing share prices plunged with the Bit­coin crash, many are left won­der­ing whether NFTs and the embrace of every­thing blockchain are a bub­ble that has burst. 

The price of Bit­coin expe­ri­enced great volatil­i­ty over the week­end, drop­ping more than 20% last Fri­day, Asia time, falling below US$50,000 for the first time since Octo­ber. The plunge was part of a glob­al mar­ket down­turn goad­ed by the emer­gence of the Omi­cron vari­ant of Covid-19, China’s con­tin­u­ing Ever­grande uncer­tain­ty and fears of the rise and per­sis­tence of infla­tion in the U.S. 

“Peo­ple moved their mon­ey away from risk equi­ties into the safer U.S. dol­lar as they expect­ed the U.S. to begin its taper­ing next March,” said Kim Dae-jong, pro­fes­sor of busi­ness at Sejong Uni­ver­si­ty, in an inter­view with Forkast.News. Kim believes Char­lie Munger’s rant against cryp­tocur­ren­cies also played a big part.

Apart from Bit­coin, many oth­er alt­coins, includ­ing the meta­verse and Game­Fi tokens Decentraland’s MANA and Axie Infinity’s AXS, were also affect­ed. The mar­ket cap­i­tal­iza­tion of the two cryp­tocur­ren­cies fell over 20% last week, and are down around 36% from their all-time highs in Novem­ber. This week, how­ev­er, Bit­coin and the two game tokens began to recover.

What have not recov­er yet are the stock prices of South Kore­an game devel­op­ers that jumped into NFTs and the meta­verse

Wemade, the video game devel­op­er of the play-to-earn (P2E) NFT game MIR4, dropped 10.2% in price on the stock mar­ket on Mon­day, and fell anoth­er 3.4% the next day. Wemade’s stock price dwin­dled more than 30% in less than a month from its all-time high in November.

Wemade became the go-to asset for investors who were seek­ing to prof­it in blockchain tech­nol­o­gy. Its MMORPG (mas­sive­ly mul­ti­play­er online role-play­ing game) MIR4’s glob­al ver­sion suc­cess­ful­ly adopt­ed the P2E sys­tem by reward­ing play­ers with exchange­able NFTs. It is cur­rent­ly the sixth most-pop­u­lar game on the Steam plat­form, with more than 85,000 con­cur­rent play­ers. It also announced a goal to release a hun­dred blockchain-based games by next year.

But its suc­cess and ambi­tion could not save it from the Bit­coin sell­off and glob­al mar­ket down­turn. Wemade shares are priced at 156,000 Kore­an won accord­ing to Investing.com, down from a high of 237,000 Kore­an won (US$ 201) in November. 

Shares of oth­er sig­nif­i­cant game devel­op­ers that recent­ly announced NFT devel­op­ments, such as Gamevil, Kakao Games and Pearl Abyss, also con­tin­ued to plum­met from last Fri­day. They fell by 30.9%, 22.3% and 18.7%, respec­tive­ly, from their peaks.

Local media reports that the drop is a reminder that blockchain-induced assets are still very high-risk. But Kim says he is not wor­ried about the cur­rent mar­ket dip. 

“There is orig­i­nal val­ue in NFTs and the meta­verse, and that val­ue has already been wide­ly acknowl­edged,” he said, adding that, “Any­thing well-craft­ed will con­tin­ue to sur­vive no mat­ter the circumstances.”

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