US FINANCE giant Morgan Stanley has warned the collapse of the cryptocurrency markets risks drawing in other elements of the Web3.0 sphere – with NFTs and metaverse real estate at risk.
More than $300billion was wiped out by a crash in cryptocurrency prices last week, as confidence in the market evaporated.
Following the rapid decline, Morgan Stanley’s chief crypto analyst Sheena Shah warned other blockchain assets could see a huge drop in value.
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“Hyped and leveraged areas of crypto, such as decentralised finance (DeFi) and crypto-backed stablecoins, are seeing mass liquidations, as it is becoming clearer that all the elevated prices were traded on speculation, with limited real user demand,” the analyst wrote.
The report from the bank essentially warned those who have pumped money into NFTs and metaverse land that they could be about to see a downturn in their investment.
The price of digital land – known as parcels – have shot up over the past 18 months.
In 2021 alone, prices for metaverse real estate rose by 700 percent.
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And in February 24/7 Crypto reported analysts from MetaMetric Solutions expected nearly $1billion worth of sales in metaverse property in 2022.
Extreme growth was also seen in NFTs over the same period.
In 2021 total sales value of non-fungible tokens was a record $25billion, with 2022 surpassing that figure by the end of February.
However, there has been a downturn in the sales of both assets since then.
The value of NFT sales in the past three months has dropped by about 40 percent to $17.1billion, according to data from online platform NFTGo.
The crypto collapse has led to concerns the wobble being seen in NFT sales is a sign the tokens could be the next blockchain assets to see a plummet in value.
However, big investors in the market have indicated they remain willing to stand by their gamble.
Earlier this week iconic auctioneers Sotheby’s, who first held an NFT auction in April 2021, indicated the remained confident in demand.
“NFT sales have not stopped,” a spokesman said this week, adding that more auctions of the tokens would be launched “soon”.
