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Gaming tokens usher in altcoin season

In the world of cryptocurrencies, where Bitcoin and Ethereum are becoming more mainstream, there is a new wave of coins that have been launched in recent months with an emphasis on gaming.
These tokens for games will soon give way to customized alt-coins developed by developers who want to offer their players additional features such as paying dividends or acquiring specific items within games.

The “altcoin season 2021” is a term that refers to the time when many cryptocurrencies will be released. Altcoins are digital currencies other than Bitcoin.

While Bitcoin is still cooling down after hitting an all-time high in early November, and the decentralized finance (DeFi) sector seems to be dry, gaming tokens appear to have seized center stage, with large increases witnessed across the board. 

With over 340 percent increases in the previous month, The Sandbox’s SAND made headlines as it lead the excitement for gaming tokens. Another example is GALA, which had a similar 300 percent increase in November. After Facebook’s rebranding to Meta, such currencies gained traction, including those under the metaverse sphere like Decentraland’s MANA and Illuvium’s ILV, implying that gaming tokens might be heralding a new altcoin season.

When a majority of the leading cryptocurrencies outperform Bitcoin (BTC) over a specific time, it’s called an altcoin season. Cointelegraph Markets Pro, for example, employs a two-week methodology and now displays a 40 percent bias in favor of cryptocurrencies. This indicates that cryptocurrencies have outperformed BTC during the last two weeks.

However, during the last month, the top ten cryptocurrencies by market capitalization have had mixed performances versus Bitcoin, with the leading tokens in the gaming industry outperforming Bitcoin. Of course, SAND has been the leader since October, but Axie Infinity Shards (AXS), Enjin Coin (ENJ), ILV, and Ultra’s UOS also outperformed Bitcoin in November.

A September investment in ILV would have returned more than thrice, while a September investment in SAND would have returned at least sevenfold. In the previous month, the majority of tokens in the gaming industry have gained by more than 100% versus Bitcoin.

Why did gaming tokens become so popular?

The combination of cryptocurrency with gaming has resulted in the seeming popularity of gaming tokens. The two are creating a new ecosystem that brings both crypto aficionados and gaming. Axie Infinity is a Pokemon-like game that has risen in popularity because to its play-to-earn (P2E) premise. Initially, players used experience points rather than a “money” inside the game to produce monsters known as “Axies.” The Smooth Love Potion (SLP) token was not released until December 19, 2019, when the Community Alpha was released. From then, the game grew in popularity, especially in underdeveloped nations like the Philippines, where it gave a means to make money during the epidemic last year.

Furthermore, nonfungible tokens contribute to the sector’s success. The NFT craze began shortly after the DeFi summer of 2020, and 2021 has been its breakthrough year. While artwork and collector objects received the most attention in the beginning, games like Axie Infinity and Dark Country helped to keep the sector afloat through the market slump in May.

NFTs established the concept of game ownership. This might be the Axies, which are valued for their rarity and visual qualities, or the game’s in-game assets in Axie Infinity. Battle of the Guardians uses a similar premise, while trade cards are used in games like Splinterlands. The capacity to independently verify the qualities and originality of digital assets is ostensibly what gave gaming a new lease of life.

Getting investors interested

As the popularity of gaming tokens grows, so does the amount of money invested in the space. According to BlockchainGamerBiz, blockchain gaming firms generated nearly $3.7 billion in 2021, a 414 percent growth from 2020.

The most well-known of them is Forte, which raised $725 million in a Series B investment headed by Sea Capital and Kora Management. Forte intends to expand its product and service offerings, as well as entice additional game producers to join its blockchain gaming platform. Sorare, a fantasy soccer game, also received $680 million in September, bringing its total value to $1.2 billion.

One of the unicorns in the field is OpenSea, an NFT marketplace that deals with game assets and other digital assets. Such transactions signal the rising popularity of this kind of token.

Gaming tokens usher in altcoin season

Blockchain gaming’s future

The gaming business is still a minor part of the overall bitcoin economy. The biggest gaming tokens have a market valuation of roughly $21 billion, which is little when compared to Bitcoin. This implies that sector domination is still up for grabs, given how quickly the market changes, particularly because games, by their very nature, come and go. The debate is whether or whether the play-to-earn model can keep everyone engaged.

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For example, Axie Infinity’s scholarship scheme allows users with more money to cover the initial fees of playing the game for players who can’t afford it, and the two parties split the SLP created.

Axie Infinity has established a new digital environment that is attracting more people. If players are more eager in playing for money — that is, cashing out — the price of SLP will drop. This has been the case for quite some time. Assume it reaches a point where the cash value of SLP (after profit sharing) is much lower for participants in its scholarship programs. In such instance, it’s possible that they won’t spend any time playing the game at all.

Gaming tokens usher in altcoin season

Sky Mavis, on the other hand, has lately joined the Metaverse, selling virtual land for 550 Ether (ETH), or $2.3 million. It also intends to commission developers to build new games in order to keep things exciting for users, with the goal of attracting players who are more interested in the game than in the money. However, it remains to be seen if this would help to boost the price of SLP in the future. 

When the gaming sector is combined with blockchain, it looks to have additional benefits. If the present altcoin season continues into 2022, with new breakthroughs, such as the Metaverse, market supremacy might change swiftly between tokens that move farther in the field.

The Market Insights Newsletter from Cointelegraph presents our expertise on the fundamentals that drive the digital asset market. The newest data on social media sentiment, on-chain measurements, and derivatives is covered in this newsletter.

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