Crypto and blockchain-based assets have had an incredibly tumultuous year.
Bitcoin BTC/USD is sitting at a 74% drop in price from its all-time highs, and daily OpenSea non-fungible token (NFT) volume has declined 97% from its previous records. Nonetheless, this hasn’t deterred venture capitalists (VCs) from investing billions in the blockchain-based gaming market.
In 2022, VCs and angel investors invested over $3.4 billion in the blockchain gaming space (GameFi), including $534 million in October and November alone. This is surprising given the overall decline in not only the crypto and stock market but also a steep decline in VC investments overall.
Why it matters: Investments by venture capitalists can often be a strong predictor of future trends, which can give insights into good industries to invest in as they gain momentum.
For example, startup Gameflip is raising on StartEngine — meaning anyone can invest — and has raised over $10 million from Silicon Valley VCs to facilitate its gaming and blockchain-based asset marketplace.
This might be because of the increasing trend of mainstream adoption of NFTs in gaming. Most notably, GameStop Corp.’s GME NFT gaming and collectibles store has been slowly picking up momentum with over $2 million in volume in the past month alone. Its gaming marketplace is also displaying 20 blockchain-based games.
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While VCs are still pouring money into the space, it’s certainly not immune to volatility. For example, top mainstream titles like Axie Infinity and The Sandbox, which once dominated the market and news cycle, no longer even rank in the top 10 most-active games in the market, according to a study by CoinMarketCap.
Not only are GameFi investments staying strong in general, but they are also outperforming investments within the blockchain industry. In 2021, for example, GameFi and the metaverse accounted for approximately 11.54% of all funding that went to blockchain-based companies. In 2022, that number is 17.64%, meaning they are the top investment-based trends going into 2023.
Some other growing trends are gaming marketplaces and infrastructure like Gameflip and GameStop, growing to 9.23% from about 3.18%.
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