Metaverse tokens had a great January, outperforming Bitcoin and Ether, the two largest cryptocurrencies by market cap.
The cryptocurrencies associated with the Web3 metaverses The Sandbox and Decentraland, SAND and MANA, were up 94% and 156%, respectively, in January. Over the same period, Bitcoin rose about 40% and Ether added 33%, according to CoinMarketCap.
The rise in value for metaverse tokens can be attributed to several factors depending on the platform, but one thing they have in common is the promise some people see in their developers, said Pedro Herrera, head of research at DappRadar.
When you look at these projects, you see solid teams with very defined roadmaps and good community and communication plans, he told Fortune.
Decentraland jumped from 30 cents at the beginning of the year to 77 cents by the last day of January, partly because of excitement around future developments. The platform plans to host its metaverse fashion week in March, which brings the promise of attracting big names to the space. In the past, the event has attracted brands including Dolce & Gabbana, Etro, and Elie Saab.
Decentraland has also tinkered with the mechanics of its platform recently, including custom links and differentiated name tags.
Still, what could hold the token back from skyrocketing as it did two years ago could be the nearly $8 million the Decentraland Foundation has tied up in the Genesis bankruptcy. Despite January gains, MANA is still down from its record high of $4.86 in November 2021.
While SAND, The Sandboxs cryptocurrency, kicked off the year at 38 cents, it was up to 75 cents by the end of last month, adding 94%.
The Sandboxs token also could be benefiting from a token unlock planned for Feb. 14, when the platform said it will release 12% of the tokens supply, or about $273 million worth.
While unlocks, which release tokens previously withheld from circulating, have often been seen during bear markets, recently the Aptos and Axie Infinity tokens each rallied just before unlocks, according to CoinDesk.
Still, because much of the unlocked supply is allocated to investors, this could weigh down the coin in the months to come.
While the jump in the value of metaverse tokens in the first month of the year is a bullish sign for 2023, Herrera of DappRadar said SAND and MANA are riding the coattails of a solid month for the two most popular cryptocurrencies, Bitcoin and Ether.
A recovery period for both signal room for price growth for altcoins, Herrera told Fortune. If the trend is reversed and we enter a bearish trend down the line, expect a correction in most tokens.
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