Cryptocurrency has had a rough time lately.
The elusive digital currency used by investors, gamers, and metaverse early-adopters to purchase NFTs (non-fungible tokens), avatar skins in games like Roblox, and virtual collectible goods has seen a recent downturn from record highs. But while the metaverse’s main form of payment and conducting transactions virtually has seen a vast fluctuation in value, many companies are still moving full steam ahead on their plans to plant their stake in the virtual landscape.
Bitcoin, the flagship crypto token, made headlines when its price dropped below $20,000 last month, a value the digital currency hasn’t seen since December 2020. This is far lower than its peak in November, when bitcoin prices neared $65,000.
The same story could also be told for the popular metaverse currency ethereum, which can be used in decentralized web3 worlds like Decentraland and The Sandbox to buy digital and phygital products. Its value fell below $900 last month, its lowest level since January 2021, and it is down 66.7% so far this year from its high of nearly $5,000 in January.
While the value of both coins change by the minute, bitcoin did see a slight bump to $21,780 on Friday. It is currently at $20,507 at the time of this report. Ethereum is currently valued at 1,142.63, and has seen a decrease 3.7% over the last five days.
According to many experts, the price of both currencies has been extremely volatile over the last few months due to a broader market retreat from risky assets by spooked investors. Overall values in the crypto market saw a sharp drop in June after the Federal Reserve raised interest rates as it aimed to fight soaring inflation levels.
“The downturn in crypto prices is a confluence of many factors: lack of liquidity, inflation, raising interest rates and the downturn of all financial markets more generally,” said Brian Trunzo, metaverse lead at web3 developer Polygon Studios. “Though I am not an investment professional, it’s fairly clear that while the ‘crypto crash’ makes for sensational headlines, it’s not unique to the broader assets market. With a recession looming, it would make sense for investors to seek safer returns. The positive side of this is that it has removed noise from the system and allowed for those who are building to do so with less distraction in the market.”
Holden Bale, GVP and global head of commerce at Brooklyn, N.Y.-based digital agency Huge, added that crypto historically has had its share of volatility, but is still fairly stable for a financial innovation that’s less than two decades old. “Recessionary fears tend to lead to pull-back in any market that is liquid, and unlike real estate, where there has been rampant speculation in the past, crypto is very liquid, so it’s easy for people to exit — especially retail investors — if they feel spooked,” Bale told FN. “That, combined with the emergence of more and more cryptocurrencies that are less than serious, such as dogecoin, casts a pallor over the entire crypto market in the short term.”
Still, despite cryptocurrency’s continued plunge in value, most brands that are activating in web3 and the metaverse are not slowing down. In fact, these days it seems as though every brand is making — or preparing to make — the leap into the realm of virtual goods.
This can most recently be seen at Salvatore Ferragamo’s new SoHo store, which opened last month and is a prime example of physical-meets-digital web3 activations. The Italian luxury brand has installed a new NFT experience at its 63 Greene Street store, where visitors enter a booth to create their own NFT from a selection of Shxpir designed backdrops.
Other recent moves into the metaverse and web3 include Nicholas Kirkwood‘s collaboration with White Rabbit for Decentraland’s first Metaverse Fashion Week earlier this year. For that event, the designer took one of his “classic styles” and evolved it with more of a cartoony feel and youthful silhouette, then cast it in five variants or colorways. The collab offered NFTs for sale on web3 marketplace OpenSea, non-NFT digital wearables and augmented reality lenses for social media.
Other major shoe players are also getting in on the action, as seen by Nike’s acquisition in November of RTFKT, a digital creator of virtual sneakers, collectibles and accessories. That same month, Adidas Originals released its first NFT collection titled “Into the Metaverse.” Owners of the NFTs received exclusive access to Adidas Originals experiences and product, including virtual wearables for blockchain-based gaming world The Sandbox and other platforms, and exclusive physical product to match.
Experts predict these launches are likely to continue despite what’s happening in the crypto market. In fact, the “crypto crash” could be good for the metaverse in the long run, said Emily Wengert, managing director and global executive creative director of experiential at Huge. “The drop in crypto prices we are currently experiencing can reduce barriers to entry. For companies that aren’t virtual or web3 natives, metaverse activity is a rounding error in their revenue. It’s not about revenue generation; it’s about exploring a new space at the intersection of community and creation, which is still very key. If anything, a downturn associated with a broader recession might turn out speculators and leave space for ‘true believers,’ artists and innovators.”
Jeff Hood, a well-known NFT community builder and blockchain industry leader who serves as CEO and co-founder of full-service web3 strategy company MetaCurio, also chimed in on metaverse’s future. “Most brands and companies entering into web3 are looking at this as the next evolution of the internet, not as a speculative investment,” Hood said. “So they are laying the foundation for their brands for the future of what is to come. We are at the very beginning of web3. We are really in web2.5. So brands and companies should not abandon their road maps solely based on the current market conditions around crypto.”
Polygon Studios’ Trunzo concurred: “By all metrics, interest in the metaverse only continues to rise. And this is a long-term game. Even Citi projects the ‘metaversal economy’ to be anywhere between $8 and $13 trillion by 2030. Any perceived disinterest in the metaverse’s development would be similar to the perceived disinterest in the internet in the year 2000 — those who continued to innovate became the Amazons, Facebooks and Googles of the world.”
This same thinking was reiterated by George Yang, founder of phygital web3 sneaker and fashion brand Cult&Rain. “We are really in the dial-up stage of the metaverse,” Yang told FN. “In the early 2000s, when we had the dot-com bubble burst after an extreme growth period, we are sort of at that same moment in the web3 world. Many of the players that launched last year that aren’t adding to the conversation or world in a meaningful way are going under, sort of like what happened in the early 2000s. We needed this purge.”
But Yang isn’t worried about the future of web3 or the metaverse, regardless of the value of cryptocurrency. In fact, he is building his own metaverse, called “Cultr World.” Yang said the photo-realistic space will serve as Cult&Rain’s own social club for consumers, where users can enter the metaverse through other platforms like The Sandbox and interact with other members and attend events in the Cultr Lounge.
Users will also be able to purchase Cult&Rain product through its new Cultr Shop, where consumers can grab NFTs from the brand’s Genesis, Drop001 (& future) collections, physical sneakers that replicate the NFTs, and digital fashion collections that will grant them a free future airdrop of a digital wearable.
“I see this as an entirely new model of e-commerce,” Yang added. “The metaverse is here to stay.”