Decentraland (MANA-USD) is an Ethereum (ETH-USD)-based game that allows people to simulate life in a metaverse space. This was all very exciting for investors in MANA at first. But now, the problem is the crypto has been in a freefall recently.
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For example, Decentraland’s crypto price peaked around $5.48 on Nov. 24. But as of Feb. 22, it has drifted down to $2.64. That is a loss of 51.8% in just about three months.
Moreover, the price of MANA hit a bottom on Jan. 22 at $1.04. This is really good news for investors, since it means Decentraland’s price has been recovering quite dramatically. But now the price has risen more than 153% from its low price of $1.04 less than a month ago.
So something must be going well for the cryptocurrency. Let’s look into it further.
Decentraland’s Standout Features
Its key feature is that players can buy and sell virtual land and related parcels. They can also customize the land and parcels. These plots are represented by non-fungible tokens (NFTs) and related assets.
Some of the land parcels that are bought and sold in the Decentraland metaverse have done quite well. This could account for part of the reason why MANA has risen so far off its recent trough.
For example, Metaverse Group, a virtual real estate company, recently bought an “estate” (multiple pieces of land connected together) for about $2.4 million. This was seen as the largest sale of virtual land in the Decentraland’s history.
The sale was in Decentraland’s Fashion Street Estate. Metaverse plans to use the digital space to host high-end fashion shows with real-world brands. This huge sale was after a $2.3 million land sale in the play-to-earn metaverse game Axie Infinity.
In fact, CNBC recently reported digital land sales likely topped $500 million last year, according to a metaverse real estate investment advisory firm. They also estimate 2022 sales of metaverse land could easily be double this amount.
MANA Is a Non-Correlated Asset
This is a non-market-correlated factor that is likely pushing up the price of MANA recently. As a result, Decentraland is fast becoming a major alternative investment.
Investors are starting to believe it won’t necessarily go down along with the market. They look very carefully for the kinds of assets like these. Their prices do not appear to be associated with market factors.
As a result, the volume and levels of digital land asset prices will rise. This in turn pushes up the price of MANA, at least on a percentage correlation basis.
CNBC reported this factor could be quite significant. A report from BrandEssence Market Research found the metaverse real estate market could grow at a 31% compound annual rate from 2022 to 2028.
This is a “secular” force that could push up the MANA price. The article referred to another metaverse real estate investor and advisory firm, Republic Realm. It paid a record $4.3 million for land in the largest metaverse real estate platform, Sandbox (SAND-USD).
So far there have been four big operators: Decentraland, Sandbox, Cryptovoxels and Somnium (SOM-USD). According to CNBC, Sandbox has 62% of the land parcels available for sale. Decentraland has the next-largest supply with 90,600 parcels.
Where This Leaves Investors in Decentraland
Decentraland has a unique and non-market correlated digital asset that is slowly pushing up the price of its digital token, MANA. If reports are correct, the value of digital land could grow at a significant rate.
This will be a major driving force for MANA over the next several years. Patient investors will look for good entry points to invest in Decentraland.
This could include its present price — even though it is well up over the trough price in the last month, MANA could still have much further to go.
On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) 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.
Mark Hake writes about personal finance on mrhake.medium.com and Newsbreak.com runs the Total Yield Value Guide which you can review here.