Analysis of Impact of Bull Run on Web3 Gaming and NFTs
In the thrilling world of cryptocurrencies, bull runs are akin to adrenaline-fueled roller coaster rides, bringing with them significant price surges and market volatility. As we stand on the precipice of the next potential bull run, the spotlight is on two burgeoning sectors: Web3 gaming and NFTs. We’re about to dive into these markets, look at what happened in the past, and make some guesses about what could happen in the future. It’s a journey full of interesting facts and trends that could shape the future of Web3 gaming and NFTs.
Understanding Bull Runs and Their Impact
A bull run in the crypto market is a period of sustained upward momentum, where the prices of cryptocurrencies increase significantly over time. This is often driven by a combination of factors including positive market sentiment, increased adoption of cryptocurrencies, technological advancements, and regulatory developments.
The impact of a bull run is far-reaching and transformative. Here are some general effects:
- Increased Market Capitalization: During a bull run, the total market capitalization of cryptocurrencies can reach new highs, as both new and existing investors pump money into the market.
- Mainstream Adoption: Bull runs often lead to increased public interest and mainstream adoption of cryptocurrencies. This can further drive up the prices of cryptocurrencies.
- Innovation and Development: The increased funding and interest during a bull run can lead to innovation and development in the crypto space. This includes the emergence of new cryptocurrencies, blockchain technologies, and use cases such as Web3 gaming and NFTs.
- Volatility: While bull runs can lead to rapid increases in price, they also increase the volatility of the crypto market. Prices can fluctuate wildly, leading to potential risks for investors.
- Wealth Creation and Redistribution: Bull runs can create significant wealth for those who hold cryptocurrencies before and during the run. However, they can also lead to wealth redistribution, as those who buy at the peak of the run and sell during a market correction can incur losses.
The Previous Bull Run: A Retrospective
In 2021, the crypto market experienced a bull run, a period of rapid growth where prices of cryptocurrencies increased significantly. This bull run had a big impact on Web3 gaming and the NFT market.
Impact on Web3 Gaming
During the crypto bull run, the failure rate of Web3 games decreased notably to 45.9%, with 339 projects becoming inactive. This suggests that a bull run can create a more favourable environment for Web3 games, leading to a decrease in failure rates. Despite hosting some of the largest failed games, 2021 recorded the lowest failure rate in recent years.
However, 2022, which followed the bull run, saw the highest failure rate in the history of Web3 gaming. A total of 742 games were unable to sustain themselves, underscoring the harsh impact of market conditions on the industry
Impact on the NFT Market
In the same period, the NFT market saw exponential growth, gaining traction among institutions, investors, and businesses more than ever before. The NFT boom also caused a massive upswing among the majority of cryptos. A study examining more than 73,000 NFT collections found that 95% had a market cap of 0 ETH, suggesting that most NFTs may now be worthless.
- CryptoKitties: One of the first Web3 games that gathered hype in late 2017. However, its adoption has since fizzled out.
- Decentraland, The Sandbox, and Axie Infinity: These are among other Web3 games that were launched in the earlier years and are still widely used today.
- Alien Worlds, Splinterlands, and Planet IX: These had the three highest average unique active wallets used between Jan. 1 and Apr. 22, 2023
Despite the initial acclaim and significant interest and investments, the CoinGecko report casts doubt on the sustainability of the industry. The high failure rate of Web3 games and the volatility of the NFT market highlight the challenges and risks involved in these sectors. However, the potential for high returns during a bull run continues to attract investors and developers.
Current Market Conditions and Recent Developments in Web3 Gaming and NFTs
Web3 gaming has been a transformative force in the gaming industry, offering players new monetization opportunities, decentralized governance, increased interoperability, and improved user experiences.
According to a report, the Asia-Pacific (APAC) region leads web3 game development by hosting 40 percent of the game developers. The USA stands out as the largest market for web3 game developers (30 percent), followed by South Korea (12 percent), the UK (6 percent), Singapore (6 percent), Vietnam (4 percent), and Australia (4 percent).
By the third quarter of 2023, investments in blockchain gaming reached $1.5 billion, with over $800 million going specifically to web3 gaming. In 2023, more than 81 new blockchain networks targeting gaming were announced, a 40 percent increase from the previous year.
Source: dApp Radar
The NFT market has experienced significant fluctuations. By late 2022, the daily market size of NFTs on Ethereum was much lower than in 2021. However, the market has shown resilience. In January 2023, NFT trading volume hit $946 million, the highest volume since June 2022.
Despite the market’s volatility, interest in NFTs has persisted. In January, 2.4 million NFTs were sold on OpenSea, the largest NFT marketplace.
In the world of web3 gaming, the third quarter of 2023 has proven to be a dynamic and transformative period. The emergence of Skale and zkSync as rising in the ranks has attracted significant interest, particularly from the gaming community.
In the NFT space, there have been developments in areas such as Artificial Intelligence (AI), fractional NFTs, music NFTs, fractional NFT games, and NFT ticketing.
Source: dApp Radar
The Upcoming Bull Run
As we approach the next bull run, it’s expected that the Web3 gaming industry and the NFT market will experience significant growth. Web3 projects are believed to rise by more than 100x in the upcoming bull run, much like the NFTs did in the previous one.
The gaming industry is poised to put this theory to the test and potentially revolutionize NFT adoption. With several highly anticipated Web3 games slated for release, the gaming industry is expected to drive the adoption of cryptocurrencies and NFTs, reshaping the gaming industry’s economy.
The NFT market is also predicted to evolve significantly, with potential expansion beyond its current focus on art and collectables. This growth is expected to encompass sectors such as real estate and intellectual property rights, enhancing the utility and scope of NFTs.
As we look ahead, the intersection of Web3 gaming and NFTs presents a compelling narrative for the future of digital economies. The anticipated bull run could potentially catalyze unprecedented growth in these sectors, underpinned by technological advancements and increasing user adoption.
Web3 gaming, with its promise of decentralized governance and player monetization, is poised to disrupt traditional gaming paradigms. The influx of new blockchain networks targeting gaming is a testament to the sector’s vibrancy and potential.
The NFT market, despite its volatility, continues to command attention. Its expansion beyond art and collectables into realms like real estate and intellectual property rights signifies the growing recognition of NFTs as versatile digital assets.
However, it’s crucial to navigate this space with informed caution. Market dynamics are complex and can be influenced by a multitude of factors. As always, thorough research and due diligence are paramount for anyone looking to participate in these markets.