What happened

The market went on a wild ride on Thursday morning after inflation data was released and investors tried to project how that would impact the Federal Reserve's interest-rate moves. Early on, worry about higher rates resulted in falling stock prices, and cryptocurrencies were some of the hardest hit. But the drop passed quickly, and values have mostly recovered.

For example, Dogecoin (CRYPTO: DOGE) has had a strange day, falling as much as 7.7% in early-morning trading only to recover and trade about flat on the day as of 1:30 p.m. ET. Polkadot (CRYPTO: DOT) dropped up to 7.9% and is now down 1.9%, ChainLink (CRYPTO: LINK) was down as much as 11.7% and is currently off 2.8%, while The Sandbox (CRYPTO: SAND) plunged 10.9% and is now down 3.4% on the day.

So what

The biggest news of the day was the Bureau of Labor Statistics releasing data that showed consumer prices were up 8.2% year over year and 0.4% month over month in September 2022. This was a slightly higher inflation rate than investors were expecting, which was why stocks and cryptocurrencies dropped sharply early in trading.

Investors have spent much of the last six months trying to figure out how far and how fast the Federal Reserve will raise interest rates, and inflation is the Fed's biggest concern. So higher inflation is seen as a sign that the Fed will keep increasing rates, which hurts the value of risky assets.

It's worth keeping in mind that inflation is up big over the last year, but it's slowed dramatically since June 2022. Although 0.4% inflation month over month seems high, that's only one month. And the trend is toward tepid inflation right now, which might mean the Fed is closer to slowing rate increases, especially if there's a recession.

Now what

There's a lot to digest today, and the market seemed to have multiple views in just a few hours. But I think the takeaway is that the Federal Reserve will likely raise rates through the end of the year, and it's possible that will lead to a recession. This isn't a new concern; stocks have been falling for months on exactly this uncertainty.

For crypto, the impact of higher rates isn't really known. Investors might see this as a risky asset, but cryptocurrencies aren't risky companies that carry debt loads or aren't profitable. These are blockchain assets that might or might not continue trading in step with volatile securities like tech stocks.

I think today's move is another example of typical market volatility. There's no underlying change in what's being built on the blockchain today, but assets are being priced differently based on what the public thinks the Federal Reserve is doing. Investors with a long-term mindset should look past volatile days and focus on the long term, because that's what matters for our portfolios. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why crypto cratered before a quick recovery today appeared first on The Motley Fool Australia.

The first period ran for some five months, from July through to November.

The second period took over in December and ran straight through to 30 June.

The biggest differentiator between the two halves was the outlook for interest rates.

Heading into November, central banks were signalling investors could expect historically low rates well into 2024 to support the global economic recovery from the pandemic. But the pace of that recovery surprised to the upside, and along with Russia's invasion of Ukraine, inflation numbers rapidly exceeded central banks' target ranges.

You know what happened next.

Interest rates across much of the world began to rise sharply, with more rate hikes flagged in future months.

This knocked the stuffing out of most cryptos and most other risk assets. Indeed, the tech-heavy NASDAQ lost 31% from mid-November through to the end of FY22. And Bitcoin (CRYPTO: BTC) tumbled 55% over the full 12 months.

Hence, we end the financial year with only 14 tokens significantly in the green.

With that said, these were the five best cryptos to have bought and held during the course of the financial year.

(Note, the best performers don't include tiny altcoins. We focused solely on the list of top 100 tokens by market cap.)

FY22's fourth and fifth best performing digital tokens

The fifth best crypto to have held in FY22 is UNUS SED LEO (CRYPTO: LEO)

Launched in May 2019, Leo kicked off the financial year trading for US$2.43. By the time we turned the calendar over to July, it was worth US$5.91, up 143% over the 12 months.

If you're unfamiliar with Leo, CoinMarketCap tells us it's "a utility token that's used across the iFinex ecosystem… The cryptocurrency allows Bitfinex users to save money on trading fees. The extent of the discount depends on how much LEO that the customer has in their account."

Leo hit all-time highs of $8.04 on 8 February, well after most cryptos peaked in November.

At the time of writing, Leo is trading for US$5.74. That gives it a market cap of US$5.5 billion and places the crypto at number 17 in terms of size.

Moving on to the fourth best crypto performer of FY22 we have Axie Infinity (CRYPTO: AXS).

Created in 2019, Axie was worth US$5.39 on 1 July 2021 and traded for US$13.34 on 30 June 2022, a gain of 148%.

Readers with some gaming experience may already be familiar with the crypto, as Axie is a "trading and battling game that is partially owned and operated by its players… [allowing] players to collect, breed, raise, battle and trade token-based creatures known as Axies".

Like many leading cryptos, Axie hit record highs in November, peaking at US$165 on 6 November.

Axie is currently trading for $15.34, making it the number 43 crypto with a total market valuation of US$1.4 billion.

These were the second and third best performing altcoins

The third top crypto performer for FY22 is Kadena (CRYPTO: KDA).

Founded in 2016, Kadena was worth 38.7 US cents at the commencement of FY22 and ended the 12 months trading for US$1.52 cents, up 292%.

The total supply of the crypto is limited to one billion tokens.

According to CoinMarketCap, "Kadena is a proof-of-work blockchain that combines the proof-of-work consensus mechanism from Bitcoin with directed acyclic graph (DAG) principles to offer a scalable version of Bitcoin."

Kadena also hit its record high on 11 November, trading for US$28.25.

At the current price of $1.65, its market cap stands at US$305 million, barely sneaking onto our list as the number 98 token in virtual circulation.

Coming in as the second best crypto to have bought and held during FY22 we have The Sandbox (CRYPTO: SAND), another gaming based token.

Launched in 2011, Sand uses blockchain technology to provide a virtual world that enables users to "create, build, buy and sell digital assets in the form of a game".

Sand was trading for 24.7 US cents on 1 July 2021 and was worth 97.5 US cents on 30 June, a 12-month gain of 295%.

Any guesses when Sand hit record highs?

Yep, on 25 November the token peaked at $8.44.

At the current price of $1.28, The Sandbox has a market cap of US$1.6 billion, coming in as the 34^th biggest crypto in virtual circulation.

Which brings us to…

The best performing crypto of the 2022 financial year

And the top crypto to have held in FY22 – drum roll please – is Gala (CRYPTO: GALA).

Like two of the other top FY22 crypto performers, Gala also functions in the gaming world. According to CoinMarketCap, "Players can own non-fungible tokens (NFTs) and influence the governance of games within the Gala Games ecosystem."

Gala started FY22 trading for 0.87 US cents and closed the financial year worth 5.2 US cents for a gain of 498%.

Gala hit record highs of 83.6 US cents on, that's right, 26 November.

At the current price of 5.7 cents, Gala comes in at number 84 on the top crypto list, with a market cap of US$396 million.

The post The top 5 performing cryptos to hold in the 2022 financial year unmasked appeared first on The Motley Fool Australia.

Renowned investor Warren Buffett once said, "Be greedy when others are fearful." And with the crypto market down roughly 40% to $1.3 trillion year to date, now could be a good time for investors to shop around for quality assets trading at a discount. Let's explore why Avalanche (CRYPTO: AVAX) and The Sandbox (CRYPTO: SAND) should be on your radar. 

1. Avalanche 

Avalanche is a blockchain designed to host decentralized applications (dApps), self-executing programs that offer services on the network. It has faced near-term headwinds because of its association with the failed stablecoin platform Terra. But this challenge doesn't kill its long-term growth thesis. 

In early May, the U.S-dollar-tracking cryptocurrency TerraUSD lost its peg, triggering a collapse in its complementary token LUNA, designed to absorb the stablecoin's volatility. Avalanche has also taken a hit because Terra's developer, via the Luna Foundation Guard (LFG) (an organization that held digital assets to help prop up Terra's peg), holds around 2 million AVAX tokens -- stoking fears that it could unload the position to pay for real-world expenses such as taxes or possible litigation. 

But with almost 270 million AVAX in circulation, the sale of LFG's holdings probably won't have a significant impact on Avalanche, aside from bad press. And investors should keep a long-term perspective. 

Unlike most blockchains, Avalanche is naturally deflationary. The platform has a fixed maximum supply of 720 million AVAX tokens and burns (removing from circulation) all its transaction fees. So far, it has burned roughly 1.8 million units of AVAX worth $55 million. This mechanism should help boost the token's price over the long term -- although it will depend on demand increasing or remaining stable, which isn't guaranteed.

2. The Sandbox

Is the metaverse overhyped vaporware or a once-in-a-lifetime investment opportunity? Only time will tell. But however the concept turns out, blockchain technology is already playing a role in its development. Investing in The Sandbox is a great way to bet on this trend because of its early mover advantage in the industry. 

Some major financial institutions are optimistic about the metaverse. Analysts at CitiBank believe the opportunity could be worth a jaw-dropping $13 trillion by 2030, becoming the "next generation" of the internet. Cryptocurrencies like The Sandbox are well suited to benefit from this trend through technologies like non-fungible tokens (NFTs), which are a secure means of establishing ownership of digital assets. 

The Sandbox boasts a portfolio of over 166,000 plots of digital real estate called LANDS where individual users can build games and other digital experiences. And as one of the first crypto projects to show tangible progress in building a blockchain-based metaverse, it has attracted significant real-world interest. 

In May, Dubai's Virtual Assets Regulatory Authority announced plans to open a headquarters within The Sandbox to engage with crypto-related companies seeking to operate in the jurisdiction. This is a massive vote of confidence in the platform that could attract more investment. 

Timing the market?

Investing in a bear market is tricky because it's hard to call the bottom. But time in the market tends to be more important than timing the market. And while investors may want to wait a few months for the dust to settle, Avalanche and The Sandbox could make great long-term bets because of their unique designs and expanding market opportunities. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Buy the dip? 2 cryptocurrencies to watch appeared first on The Motley Fool Australia.

What happened

Volatility in the cryptocurrency market continues to make headline news. However, today's price action has broadly taken a bullish turn this afternoon, with many top tokens moving from the red into the green in afternoon trading 

As of 2:45 p.m. ET, Ethereum (CRYPTO: ETH), Dogecoin (CRYPTO: DOGE), and The Sandbox (CRYPTO: SAND) surged 2.2%, 1.1%, and 3.5%, respectively, over the past 24 hours.

This move higher appears to be the result of positive sentiment building around what could be a more constructive environment for crypto. Each of these top tokens has its own catalysts that bulls are relying on to make a buying decision, despite the selling pressure we've seen of late.

Recent news that Ethereum and other top cryptocurrencies could be graded as commodities by the Commodity Futures Trading Commission has some investors bullish on Ethereum, relative to other tokens. This megacap token continues to hold much steadier than smaller counterparts, largely due to the view that Ethereum is an asset class in and of itself.

Dogecoin has benefited greatly from the Elon Musk saga with Twitter of late. With the self-proclaimed "Dogefather" set to take the helm (though he's now fighting this acquisition), there's something for Dogecoin investors to look forward to. Uncertainty remains around whether the deal will get done, but more discussion around Dogecoin is generally something its bulls view positively.

The Sandbox has seen a number of high-profile brands join its metaverse, with interest seeming to surge in this sector. Should this bullish momentum in the metaverse continue, bulls have reason to like how this token is positioned.

So what

Generally speaking, taking a quick look at what equity markets are doing on a given day is a pretty good predictor of where crypto prices are headed. There's been historically high correlation between cryptocurrencies and riskier equities such as tech stocks this year. However, the choppiness of the stock market and the volatility we're seeing in the crypto market today have somewhat diverged.

Much of that appears to be due to the view that there are fundamental reasons to consider various top cryptocurrencies at these levels. Whether it's Ethereum's stability or the speculative upside that Dogecoin and The Sandbox provide, these lower token prices could represent intriguing entry points for aggressive investors looking to add risk.

Now what

The real question from here is just how aggressive investors will be. The decision to add risk at a time when there's little support for risk assets can be a daunting one. Accordingly, perhaps this is just another bear market bounce on a longer-term trend downward. 

Time will tell. Today, investor sentiment appears to be improving. Tomorrow, we'll see how the market reassesses this rally. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Ethereum and Dogecoin are recovering nicely today appeared first on The Motley Fool Australia.

What happened 

As investors sell off stocks broadly, the "risk-off" trade has made its way to cryptocurrencies. The market has been down sharply since just before the trading opened Thursday, and that's when a sudden crash hit crypto. 

As of 3:30 p.m. ET, the value of Dogecoin (CRYPTO: DOGE) had fallen 5.4% over the prior 24 hours, Ethereum (CRYPTO: ETH) was down 7.8%, and The Sandbox (CRYPTO: SAND) was down 11.8%. Ironically, early Thursday morning, values were up by nearly 10% from their Wednesday lows. 

So what 

Amid the backdrop of a falling crypto market, the news related to the industry is fairly positive. Congress is considering allowing companies to include cryptocurrencies in their 401(k) plans, which could bring a new swath of investors to the assets. California also announced that it will also look into regulations to adopt digital assets -- not fight against them -- as an executive order from President Joe Biden indicated recently.

Gucci also announced that it will begin accepting certain cryptocurrencies in its stores as early as this month, Bitcoin, Ethereum, and Dogecoin among them.

Despite those positive news items, the falling stock market is pulling cryptocurrency values down with it. In addition, the volatility of tokens means the stock market's losses are generally magnified in crypto, at least in the short term. 

Now what 

The volatility we are seeing Thursday is par for the course in cryptocurrencies. Investors need to expect that valuations will swing wildly, even if news seems to be moving in their favor. What's really changed in the last six months is that crypto values have become much more correlated with the stock market overall. 

Taking a step back, I do see some positive news for the crypto industry. Retailers accepting cryptocurrencies is a positive step toward broader adoption, and a flood of developers are moving into the space as well. That's great for the development of the crypto economy, but it'll take time for developers to build new projects and for user adoption to grow. 

I'm bullish on the development in the crypto space, as well as what appear to be favorable trends in the regulatory environment, at least in the U.S. These should be tailwinds for the crypto market overall. But it will be a while before those things have any direct impact, and clearly, traders' time horizons are getting shorter by the day. 

Big market sell-offs can be great buying opportunities for long-term investors, though it can be difficult to take advantage of them. I plan to buy crypto assets in the coming months in anticipation of their growth over the next decade, but that doesn't mean I think values will recover quickly. It may take months or even years for even the best cryptocurrencies to get back to their previous highs. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Ethereum, Dogecoin, and The Sandbox dropped today appeared first on The Motley Fool Australia.

What happened

Over the last 24 hours, the price of The Sandbox (CRYPTO: SAND) cryptocurrency traded nearly 5% higher as of 12:07 p.m. ET today after Dubai's virtual asset regulator said it plans to put a virtual headquarters in the Sandbox metaverse.

So what

The Sandbox is a virtual gaming world run on the Ethereum blockchain network, where users can create non-fungible tokens (NFTs) to use in the virtual world.

Today, Dubai's Virtual Assets Regulatory Authority (VARA), which seeks to promote Dubai as an international leader for virtual assets and to develop a digital economy in Dubai, announced that it plans to create a metaverse headquarters in the Sandbox.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why The Sandbox Cryptocurrency Is Up Today appeared first on The Motley Fool Australia.

What happened

Finding itself among the many tokens that are rising today, The Sandbox (CRYPTO: SAND), a popular metaverse cryptocurrency, is also soaring today. But why are investors so eager to scoop up this token in particular? Apparently, the company is looking to raise funds, so investors may be speculating that the company has growth plans on the horizon.

As of 1:50 p.m. ET, The Sandbox's token has risen 9.3% over the previous 24-hour period.

So what

According to Bloomberg, The Sandbox, whose majority owner is blockchain game developer Animoca Brands, is interested in raising $400 million from current as well as new investors at a valuation of $4 billion. At the moment, The Sandbox has a market cap -- the market value of its circulating supply -- of $3.35 billion. 

Citing people familiar with the matter, Bloomberg is reporting that the size of the funding and the valuation are both flexible, predicated on market sentiment and investor demand. The company didn't respond to a request for comment.

Previously, The Sandbox had raised $93 million in Series B funding from SoftBank in November. In the related press release, The Sandbox stated that the funds it had raised would be used to:

[S]cale the platform's growth as a prime entertainment destination where brands, IPs, and celebrities can engage with their fans through virtual experiences, including games, live performances, and social experiences.

Presumably, the funding that it's currently seeking will be used for similar purposes. 

Now what

Among the companies seeking to flourish in the metaverse, The Sandbox is one of the more familiar names and its early foray into the space will likely prove advantageous as others are seeking to gain ground. For crypto-curious investors, this name is one to watch closely.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why The Sandbox cryptocurrency is soaring today appeared first on The Motley Fool Australia.

It seems like talk of the metaverse is everywhere these days, with news of novel and exciting planned additions to this collection of virtual 3D worlds cropping up constantly. It's a wild time to be an investor, to be sure. Based on the hype, investing in metaverse spaces seems like the next big thing for anyone with a few spare dollars lying around.

Although it's easy to buy metaverse real estate, it's not the right choice for just anyone. Not only is it a very risky investment, there are still a lot of unknowns. Even so, there are some reasons to jump into this space as an investor, including those outlined below.

You have a brand or business to promote

If you have a company or brand that appeals to Generation Z (those people between 10 and 25 years of age), the metaverse could be a great place to connect with them. A lot of the members of this generation are already in the workforce, and they're familiar with digital spaces that look and behave like popular metaverse platforms, including Decentraland and The Sandbox. Gen Z already has an estimated collective buying power of about $150 billion.

Because these people are largely less interested in older social media platforms, they tend to find themselves interacting with each other on platforms that inhabit the metaverse, or those that are metaverse-like. This is a version of the internet that Gen Z knows well and is comfortable with, and a good advertiser takes their business where their customers are. After all, Gen Z is the future of the internet, and what they imagine it to be will necessarily become reality as they come of age.

You want to help other companies find a foothold in the metaverse

If you already have a pretty good idea of how the metaverse will work and what kinds of projects will make sense in the space, then it might be a great idea to invest in metaverse real estate with the intention of becoming either a developer or a landlord.

Many companies are trying to find a way to get into the metaverse, but don't really know what to do first. Metaverse developers can help them take a project from the idea phase through execution, often with many partners that help add expertise along the way. They may advise on where projects should be built, or when they should launch (such as during Fashion Week in Decentraland), and they often acquire property to develop before reselling it.

Metaverse landlords, on the other hand, know what they want to build and to whom they want to lease those spaces. They seek out businesses and brands that want a metaverse presence, but aren't sure they're ready to commit fully to purchasing virtual land. Metaverse landlords stand to generate long-term rental income if they design appealing structures in great locations.

You want to build something for yourself

One type of metaverse real estate investor that we rarely discuss is the kind who is curious about this bold new world and also very tech-forward. They probably are already dabbling in cryptocurrencies, and likely have been playing around in metaverse spaces, but haven't yet set down roots. For individuals of this type, buying a piece of digital land could be more an act of self-expression than an act of investment.

However, simply by holding that virtual property -- even if it is, for now, just an empty lot or an art installation -- they become investors, too. According to a Citi GPS report, by the end of this decade, the metaverse can be expected to expand to as many as 5 billion users and a total addressable market of up to $13 trillion. The likely end result of such expansion is that many parcels of digital land will grow in value even if they've only been used for their owners' enjoyment. As long as the platform you choose has a healthy community and is driven by a sense of collaboration, people will continue to make it their digital home.

The metaverse isn't for every investor, but many belong there

Although investing in metaverse real estate can seem like a pretty dodgy experiment, there is mounting evidence that this alternate reality is here to stay. With a limited supply of building lots and a potentially unlimited number of users, the value of real estate on any metaverse platform will be driven, in part, by its popularity. It's the same for physical land in any neighborhood in any city or town.

This early in the growth of what is expected to become the metaverse, there's no way to really know which metaverse platforms will hit and which will shrink into obscurity, but if you're the betting type, or you have a business plan in mind that would benefit from a metaverse presence, you definitely should give it a try. Patience is key, because it will take time (and effort) for these platforms to mature. But there's only so much downside versus enormous upside to being an early adopter of technology that has the potential to become a whole new way of connecting people around the globe.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Should you buy Metaverse real estate? appeared first on The Motley Fool Australia.

What happened

Popular metaverse cryptocurrency The Sandbox (CRYPTO: SAND) has seen some wild price action today. As of noon ET, this token has surged into positive territory, up 2.1% over the past 24 hours. This move negated an earlier intraday decline that saw The Sandbox decline as much as 5.9% over a 24-hour period ending this morning.

The Sandbox has been one of the higher-beta cryptocurrencies of late, surging in late 2021 as investors sought metaverse-related assets. Accordingly, during the recent market-driven declines tied to macro risks, The Sandbox has underperformed.

This morning, investors appear to be taking a more positive view of risk assets, as bond yields declined following news that the Russia-Ukraine war might be heating up.

And news out of South Korea early this morning suggested that the country will be investing heavily in creating its own metaverse platform. A $187 million national metaverse project will be set up, something South Korea hopes will spur corporate growth domestically.

So what

Indeed, the metaverse is an interesting place for investors to focus on right now. On the one hand, they can certainly make the argument that metaverse stocks and cryptocurrencies both likely appreciated far too rapidly, relative to their long-term growth prospects. Accordingly, this breather can be viewed as one that has been necessary, from a fundamentals standpoint.

On the other hand, the massive corporate (and now government) investment in this space is one that has many investors excited. This news coming out of South Korea might renew interest among many investors who have put blockchain-based metaverse projects on the back burner.

Now what

There's not much investors can control when it comes to the macro environment. Yes, risk assets are rallying once again today amid lower bond yields. However, the roller coaster ride we've been on in recent months appears to be far from over. Accordingly, those looking at any high-beta asset, such as The Sandbox, should be aware of the inherent risks tied to volatility, particularly over the near term.

However, from a longer-term perspective, there is a lot to like about the fact that big money continues to flow into the metaverse. Capital flows matter, and today's news might have sparked some renewed interest among dormant investors.

The metaverse is a growth area (both within and outside of the crypto world) that I think has legs. Accordingly, The Sandbox is a top metaverse crypto project investors might want to put on their watch list.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why the Sandbox cryptocurrency went from red to green today appeared first on The Motley Fool Australia.

What happened

The intense fighting picking up between Russia and the Ukraine has sent shockwaves through financial markets. This real-world conflict has led to mass selling across a range of sectors many investors may think shouldn't be affected, including metaverse-related tokens. However, as of 12:30 p.m. ET, Axie Infinity (CRYPTO: AXS), Decentraland (CRYPTO: MANA), The Sandbox (CRYPTO: SAND), and Enjin Coin (CRYPTO: ENJ) have plummeted 14.3%, 12.9%, 12.2%, and 16.4%, respectively, over the past 24 hours. 

So what

Notably, metaverse-related cryptos have been among the biggest winners from the fourth-quarter rally last year into anything metaverse related. This sharp increase in value has led to intense profit-taking by some investors worried about how capital flows may be disrupted by Russia's invasion of Ukraine. Indeed, this catalyst is likely to affect both equity and crypto markets further, as investors look to de-risk their portfolios.

Sentiment within the risk-on crypto sector remains on the "extreme fear" end of the spectrum, according to multifactorial market sentiment analysis for this sector. This gauge has been creeping lower in recent days, suggesting investors are more interested in minimizing risk than maximizing return. However, this gauge typically provides a good baseline for when the market is primed for buying opportunities, which may result in periodic rallies, should sentiment shift in the market in the coming weeks. 

Now what

As highly volatile assets, cryptocurrencies carry an inherently higher level of risk relative to other investment opportunities. For metaverse tokens that have already appreciated in value so significantly in such a short period of time, it appears investors are keen to take profits or trim losses, on fears the market may take a long time to recover from this. 

Right now, there's a tremendous amount of uncertainty shaking investor confidence in these tokens. Perhaps long-term investors can look at this turmoil as a buying opportunity. That said, there are likely many more investors who may take the perspective that more downside is likely on the horizon. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Real-world conflict hits the virtual world, metaverse cryptocurrencies plunge 12% appeared first on The Motley Fool Australia.

There is no shortage of high-growth trends for investors to be enamored with at the moment. Cloud computing, cybersecurity, telehealth, and even cannabis, represent sustainable double-digit growth opportunities.

Yet, some argue none of these opportunities offer the market potential of the metaverse.

An up to $30 trillion opportunity is on investors' doorstep

Put simply, the metaverse is the next iteration of the internet. It's a 3D virtual environment that will allow people to interact with their surroundings, as well as each other. This means an entirely new digital ecosystem will be built within the metaverse.

According to Matthew Ball, the CEO of venture capital company Epyllion, the metaverse is an opportunity with many zeroes to back it up. In speaking with Bloomberg News in November, Ball had this to say:

"Even if you have more modest expectations, precedent from the digital economy, the internet, the mobile internet, suggests that this is a $10 [trillion] to $30 trillion opportunity that will manifest in a decade or decade and a half."

By comparison, cloud computing has been one of the top-growing industries for years, and it's "only" expected to top $1 trillion in market size by the turn of the decade. That's a far cry from Ball's projection of up to $30 trillion for the metaverse by 2031 to 2036. With forecasts like this, it's no wonder investors have been willing to pile into this hypergrowth virtual ecosystem.

But there's no one-size-fits-all way to invest in the metaverse. Rather, there are three ways investors can stake their claim to this potential $30 trillion pie.

1. Diversify. Diversify. Diversify!

To begin with, investors can gain metaverse exposure by putting their money to work in metaverse-targeted exchange-traded funds (ETFs). The Roundhill Ball Metaverse ETF (NYSEMKT: METV), which Matthew Ball helped bring to market last year, is arguably the best example in the ETF space.

The idea behind a metaverse ETF is simple: Operating a virtual realm is going to require a lot -- and I mean a lot -- of working parts. There needs to be the computational power to support the metaverse, the networking and bandwidth to provide data, payments to handle virtual ecosystem transactions, hardware to allow users access to these virtual worlds, and identity security to ensure that digital assets and user identities remain protected. Mind you, this is just a small snippet of the physical and intangible needs of a massive virtual ecosystem. This means dozens of companies may play a role in supporting the metaverse.

The Roundhill Ball Metaverse ETF has 45 holdings, as of Feb. 3, with seven countries represented in the portfolio. Most importantly, the median market cap of these 45 holdings is $68 billion. In other words, the typical company being held by this ETF is going to be profitable and time-tested. While these stocks will have clear metaverse ties, there's a really good chance these companies also have highly profitable core businesses that'll fund metaverse research and development. Translation: You can sleep well if you choose to buy this ETF.

The one minor knock here is you'll pay a 0.75% net expense ratio, which is a bit higher than the weighted average expense ratio for all ETFs.  But if the metaverse is everything it's cracked up to be, a 0.75% expense ratio could be well worth it.

2. Buy individual stocks with metaverse exposure

If ETFs aren't your cup of tea, a second way to gain metaverse exposure is to directly invest in companies with metaverse ties.

The advantage of this method is it allows you to place greater weighting on the companies you feel will outperform. Plus, with most online brokerages eliminating commission fees and minimum deposit requirements, there are no fees or commissions to purchase stocks on the major U.S. exchanges. Thus, this method can save a little money, relative to purchasing an ETF.

On the flipside, buying individual stocks will require more initial and ongoing research. Thankfully, as noted, most of the companies involved in the metaverse are already well-established.

For example, Microsoft (NASDAQ: MSFT) has a variety of ways that it can benefit from the metaverse. The company's cloud infrastructure segment, Azure, is already No. 2 in global cloud spending. Cloud computing and storage will be necessary to handle the mountains of data and information generated within the metaverse.

Microsoft also made waves with its announced all-cash deal to buy gaming giant Activision Blizzard (NASDAQ: ATVI) for $68.7 billion last month. At the end of September, Activision had 390 million monthly active users, some of which are already playing games within virtual platforms. The Activision deal is another way Microsoft can bring people into its vision of a digital/virtual ecosystem.

3. YOLO with metaverse cryptocurrencies

For those of you with a high tolerance for risk (and reward), the third way to stake your claim in the $30 trillion metaverse is by purchasing relevant cryptocurrencies.

Whereas many of the companies associated with the metaverse are profitable and time-tested, most metaverse cryptocurrencies have only been around for a couple of years. It's not yet clear if they'll have the financial support or gaming interest to last for a significant length of time.

On the other hand, the two biggest players, The Sandbox (CRYPTO: SAND) and Decentraland (CRYPTO: MANA), have respective market values of $3.4 billion and $4.9 billion, respectively. If these two projects can consistently gobble up a significant portion of the capital being invested in virtual worlds, these market values could be an absolute steal.

Both The Sandbox and Decentraland have similar operating models. They're both play-to-earn-styled games built atop the Ethereum blockchain. They allow users to purchase digital plots of land that can be upgraded or built upon to attract other users. These plots of land are stored as non-fungible tokens (NFTs), which provide immutable proof of ownership of a digital asset stored on blockchain. Whereas the ownership of in-game creations stays with the developer in traditional PC and console gaming, Sandbox and Decentraland allow users to own and monetize their own creations via NFTs.

Going the "you only live once" (YOLO) route with cryptocurrencies is effectively a bet on the metaverse being decentralized. This may well be the case. But with many established companies throwing tens of billions at the metaverse, like Microsoft, a centralized future is also a very real potential outcome. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

The crypto market is certainly getting its fair share of lumps today. However, among the hardest-hit cryptocurrencies right now are those dealing in the metaverse. Top metaverse-themed tokens Axie Infinity (CRYPTO: AXS), The Sandbox (CRYPTO: SAND), and Enjin Coin (CRYPTO: ENJ) are down 5.6%, 4.8%, and 3.9%, respectively, over the past 24 hours, as of 1 p.m. ET.

These losses come as Facebook parent Meta Platforms (NASDAQ: FB) reported earnings today, which missed the mark across the board. Weak guidance and lower active user counts highlighted most investors' concerns. However, another key highlight of this report was the company's loss in its metaverse business -- of more than $10 billion. 

So what

Corporate adoption of the metaverse has, in many ways, made the otherwise conceptual virtual reality known as the metaverse a more tangible concept for the average investor to understand. However, these massive losses suggest that the expected rates of adoption among metaverse users isn't matching up to the investment dollars deep-pocketed Meta Platforms is putting up to generate growth.

For investors in these top metaverse-related tokens, that's being looked at as a negative right now. Sure, many crypto investors may view Meta Platforms as a potential threat in the metaverse (i.e., Meta's losses could be these cryptos' gains). However, until Meta's revenue can catch up to its expenses, it looks like the metaverse argument will be a tough one to sell to investors.

Now what

What does this mean for crypto investors? Perhaps more investment is needed to propel a blockchain-first metaverse forward. The rate at which Axie Infinity, The Sandbox, and Enjin can entice developers to come aboard may become a more important metric for investors to consider.

Additionally, user growth rates matter, and these platforms will need to show impressive numbers to wow investors in the face of massive corporate investment in this space.

Broadly speaking, most cryptocurrencies have followed equities much more closely in recent years, trading in higher correlation than what was seen in pre-pandemic times. For metaverse-linked tokens, Meta Platforms is certainly a benchmark to compare to. Today, that's not a good thing at all. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The largest cryptocurrency by market capitalisation, Bitcoin (CRYPTO: BTC), posted a 57% gain during the year. However, this pales in comparison to the outlandish performance of other cryptos and tokens in 2021.

When discussing investment returns we would usually be talking in the realm of tens or hundreds of percent. But today we'll be referencing returns in excess of 15,000% in a single year.

For this collection of best performing cryptocurrencies in 2021, we have filtered down to the top 100 by market cap, according to CoinMarketCap. This removes the lesser-known and more volatile cryptos from our view.

Without further ado, here are the five best cryptocurrencies/tokens of the year gone by.

Governance and metaverse tokens make top 5

Kicking off our list of the best performing crypto assets in 2021 is Terra (CRYPTO: LUNA). This blockchain-based protocol supports stable programmable payments using algorithmic means.

In other words, Terra, and its LUNA token, provide stability to cryptocurrencies. Simultaneously, the LUNA token acts as a governance token, which allows holders to vote on decisions for the underlying protocol.

An influx of decentralised applications being built on the Terra blockchain has helped this token achieve mind-blowing returns by the end of 2021. To be specific, the LUNA token was propelled 15,970% higher last year.

Beating out Terra in 2021 was a token that is well known in the metaverse community. The Sandbox (CRYPTO: SAND) token rapidly appreciated in value after Facebook announced its rebrand to Meta Platforms Inc (NASDAQ: FB) amid its push to be a big player in the digital world.

Being one of the most prominent names in blockchain-based digital worlds, The Sandbox and its native token enjoyed a substantial boost after Facebook acknowledged the metaverse in a big way. In turn, the increased attention pushed returns for The Sandbox token to 17,387% in 2021.

Great year for game-based cryptos amid NFT craze

Axie Infinity is a blockchain-based game that tapped the non-fungible token (NFT) explosion last year. The game's characters, known as Axies, are represented as NFTs — giving players ownership of their playable creatures.

Additionally, the game operates on a pay-to-earn model, allowing players to win crypto. Players can also exchange their Axie NFTs as another way to potentially profit from the game.

It appears the game has been a success, with daily active users surpassing 2 million. Similarly, the game's token Axie Infinity (CRYPTO: AXS) has erupted, gaining 20,043% in the span of 12 months.

This return might seem extremely impressive, yet the next best crypto on our list trumped those returns. The Gala (CRYPTO: GALA) token showered investors with profits in 2021, netting a staggering 49,368% gain at the end of the year.

Although Gala is also in the gaming realm, it's a little different from Axie Infinity. Setting it apart, Gala Games seeks to provide people with control over their games and in-game assets. In addition, the platform offers token holders the ability to vote on what games get funding and are developed.

From 'underdoge' to king of crypto returns

It wouldn't be the top five cryptos without the token that took the world by storm last year. Shiba Inu (CRYPTO: SHIB) is a decentralised cryptocurrency aspiring to be an Ethereum-based alternative to Dogecoin (CRYPTO: DOGE).

Many would know that these tokens are inspired by memes. However, some may not know that Shiba Inu is more than a meme. The Dogecoin alternative has created an entire decentralised finance platform, allowing users to exchange between different tokens and earn rewards from staking.

If you were an investor of Shiba Inu at the start of 2021 and held throughout the year, there's a good chance it's made you a millionaire. The crypto recorded a head-spinning 24,330,175% return last year.

The post Forget Bitcoin! These were the 5 crypto assets you wish you'd held in 2021 appeared first on The Motley Fool Australia.

2021 was a banner year for the world's top digital currencies.

While there was plenty of volatility along the way, steely nerved investors who bought into the top 5 tokens on 1 January 2021 and held on through 31 December will be sitting on some seriously outsized gains.

Below we take a look at those 5 top performers.

To weed out potential price spikes from tiny altcoins, these leading 5 were all taken from the list of top 100 tokens by market cap, and sourced from data by CoinMarketCap.

With that said…

2021's fourth and fifth best performing digital tokens

Coming in at number 5, with a 2021 price gain of 10,121% is Terra (CRYPTO: LUNA).

Terra ended the calendar year trading at US$85.54. That gave the token a market valuation of US$24.98 billion, the 10th biggest crypto in virtual circulation and the biggest to make it onto our top performers list.

So, what does Terra do?

According to CoinMarketCap, "Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems." Launched in April 2019, Terra says it offers fast and affordable settlements.

Moving on to the number four best performing crypto, we have Polygon (CRYPTO: MATIC), which posted an 11,816% gain in 2021.

Polygon was trading for US$2.56 on 31 December. That gave it a market cap of US$15.03 billion and made it the number 14 token by market cap.

Polygon, CoinMarketCap tells us, is "a platform for Ethereum scaling and infrastructure development", capable of building numerous different kinds of applications

2021's second and third best performing altcoins

The third best crypto performer of the year just gone by is The Sandbox (CRYPTO: SAND).

Sand gained 13,458% during the calendar year, trading for US$5.02 on 31 December. That gave the token a market valuation of US$4.59 billion and brought it up to number 39 in the global list of cryptocurrencies.

The Sandbox is relatively old, by crypto standards, having launched back in 2011. Using blockchain technology, the token provides a virtual world than enables users to "create, build, buy and sell digital assets in the form of a game".

While you're unlikely to hear investors in The Sandbox complaining, fellow gaming related crypto, Axie Infinity (CRYPTO: AXS), stole the second best performing spot with a 2021 gain of 16,573%.

On 31 December Axie Infinity was worth US$98.81, giving it a market cap of US$6.02 billion. That moved it up on the list to become the 27th biggest token by market valuation.

Also blockchain based, Axie Infinity is a "trading and battling game that is partially owned and operated by its players… [allowing] players to collect, breed, raise, battle and trade token-based creatures known as Axies."

Which brings us to…

The best performing crypto of 2021

While most everyone would welcome the returns from the 4 top performing altcoins listed above, none compare to the whopping 46,704% gain posted by 2021's number 1 crypto gainer, Gala (CRYPTO: GALA).

Gala finished the year trading at 48.1 US cents. That gave it a market valuation of US$3.36 billion, making it the number 46 crypto in virtual circulation as at 31 December.

Like The Sandbox and Axie Infinity, Gala is also rooted in the gaming world. According to CoinMarketCap, "Players can own non-fungible tokens (NFTs) and influence the governance of games within the Gala Games ecosystem."

Since launching in 2019, Gala Games now has 1.3 million monthly active users. The platform has sold 26,000 NFTs to date, with one selling for US$3 million.

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