Cointelegraph Consulting: Gaming tokens usher in altcoin season

While Bitcoin is still in a cooling period following its record-breaking performance in November, and with the Decentralized Finance (DeFi) sector experiencing an apparent dry spell in December, the gaming tokens have been gaining attention as huge gains are being seen in the industry.

SAND, the Sandbox’s gaming tokens, was the focus of media attention. It has seen over 340% growth in the last month. GALA also saw a similar rise of 300% in November. These coins include those that fall under the metaverse, such as Decentraland’s MANA or Illuvium’s ILV. This suggests that gaming tokens may be leading to a new altcoin season.

Altcoin season refers to a period when the majority of top altcoins outperform Bitcoin over a given time. Cointelegraph Markets Pro currently broadcasts a 40% reading for altcoins. It uses two weeks to calculate its algorithm. Altcoins performed better than BTC during the two-week period.

The top 10 most valuable cryptocurrencies according to market capitalization have had mixed results against Bitcoin over the past month. However, it is the largest token in the gaming industry that outperformed Bitcoin. SAND has been the leader since October. However, Axie Infinity Shards, Enjin Coin, ENJ, ILV, and Ultra’s UOS saw better gains than Bitcoin during November.

A September investment in ILV would have increased by more than threefold, and one in SAND would have increased by at least sevenfold. In general, tokens in the gaming sector have increased by over 100% in the past month against Bitcoin.

Gaming tokens: Why did they succeed?

Gaming tokens are gaining popularity due to the combination of cryptocurrencies, gaming and crypto. These two industries are creating a new ecosystem in which gamers and crypto enthusiasts can interact. Axie Infinity is a Pokemon-like game that has gained a lot of popularity thanks to its play-to earn (P2E), model. Initial players created monsters called “Axies” by using experience points, rather than “currency” within Axie Infinity. The Community Alpha’s December 19, 2019 release did not bring the Smooth Love Potion token (SLP). The game gained popularity, especially among the developing countries such as the Philippines, because it offered a way to make income during the last year’s pandemic.

Nonfungible tokens are also important in the sector’s success. NFT was hot right after 2020’s DeFi summer. 2021 has been the sector’s breakout year. Art and collectibles received the most attention early on, but games like Dark Country and Axie infinity helped to buffer the industry during May’s market crash.

NFTs brought the notion of ownership to games. Axie Infinity could refer to the Axies. These are valued based on their rarity, aesthetic elements, or in-game assets. Battle of the Guardians uses the same concept. However, for Splinterlands these are the trading cards. Ostensibly, digital assets can be uniquely verified and this has created a new dynamic in gaming.

Attracting investment

More investments are being made in the gaming token space as the popularity of these tokens grows. According to BlockchainGamerBiz, around $3.7 billion was raised by gaming-related blockchain companies in 2021. This is a 4144% increase over 2020.

Forte was the most prominent of these companies, having secured $725m in Series B funding from Sea Capital and Kora Management. Forte plans on expanding its product and service offerings, and attracting more game publishers to its blockchain gaming platform. In September, fantasy soccer game Sorare was also valued at $680 million.

OpenSea is a NFT marketplace that trades digital assets such as game assets. It is also one of the unicorns in this space. These deals are a sign of the growing popularity of this type of tokens.

Blockchain gaming: The future

Gaming is still a small part of the wider cryptocurrency market. The market cap of the top gaming tokens is only $21 billion, which is small compared to Bitcoin. Sector dominance is still possible, even though the market can change quickly, and games by design may be replaced. However, the question is whether play-to-earn can keep everyone interested.

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Axie Infinity’s scholarship allows users with greater capital to pay the initial costs of the game. This is called “scholars” and both parties receive the SLP.

Axie Infinity is a digital ecosystem that has seen a rise in users. The price of SLP will drop if players want to play for money, i.e. cashing out. This has been true for some time. Let’s say it reaches a point where the dollar value for SLP (after profit sharing), is significantly lower. It could even discourage them from playing the game.

Sky Mavis, however, has entered the Metaverse as it sold virtual land recently for 550 Ether (ETH) or $2.3 Million. Sky Mavis plans to hire developers to create additional games, in an effort to draw people to the game and not just the financial aspect. It remains to be seen if this will boost the price of SLP.

Blockchain and gaming seem to offer more benefits when combined. The current altcoin season could seep into 2022 with new developments, especially the Metaverse. Market dominance could shift quickly between tokens that further advance the space.

Cointelegraph’s Market Insights Newsletter shares Cointelegraph’s knowledge about the fundamentals that drive the digital asset market. This newsletter provides the most recent data on social media sentiment, on chain metrics, and derivatives.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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