During an altcoin season, a majority of the top altcoins outperform Bitcoin (BTC). For example, Cointelegraph Markets Pro’s algorithm uses two weeks and currently favors altcoins 40%. During the two-week period, altcoins outperformed BTC.
However, the top ten cryptocurrencies by market capitalization had mixed results against Bitcoin last month, with gaming tokens outperforming Bitcoin. SAND has led since October, but Axie Infinity Shards (AXS), Enjin Coin (ENJ), ILV, and Ultra’s UOS all outperformed Bitcoin in November.
An investment in ILV in September would have tripled, and one in SAND would have risen seven-fold. In the last month, most gaming tokens have risen more than 100% against Bitcoin.
The rise of gaming tokens
This is due to the combination of cryptocurrencies and gaming. They’re creating a new crypto-gaming ecosystem. Axie Infinity is a popular game due to its play-to-earn (P2E) model.
Initially, players breed Axies using experience points rather than a game currency. Smooth Love Potion (SLP) was introduced in the Community Alpha on December 19, 2019. As a result of the pandemic last year, the game gained popularity, especially among developing countries like the Philippines.
Nonfungible tokens also contribute to the sector’s success. The NFT hype followed the DeFi summer of 2020, and 2021 was its breakout year. When the market crashed in May, games like Axie Infinity and Dark Country helped to keep the industry afloat.
NFTs gave players a sense of ownership. In Axie Infinity, this could be the Axies, which are valued for their rarity and aesthetic value. Battle of the Guardians uses a similar concept, while Splinterlands uses trading cards. The ability to uniquely verify digital assets’ attributes and uniqueness arguably reshaped gaming.
As gaming tokens gain popularity, more money flows into the space. Blockchain gaming companies raised $3.7 billion in 2021, up 414 percent from 2020, according to BlockchainGamerBiz.
In a Series B led by Sea Capital and Kora Management, Forte secured $725 million. On its blockchain gaming platform, Forte plans to expand its product and service offerings.
In September, Sorare earned $680 million, boosting its valuation to $1.2 billion.
OpenSea, an NFT marketplace for digital assets, is also a unicorn in the space. These deals show the token’s rapid growth.
Altcoin Cryptogaming’s Future
The cryptocurrency gaming market is still small. The top gaming tokens have a market cap of about $21 billion, which is nothing compared to Bitcoin. That means sector dominance is still up for grabs, especially since games are designed to come and go. The debate is whether the play-to-win model can keep everyone engaged.
For example, Axie Infinity’s scholarship program lets wealthy users pay the initial game costs for less wealthy players (dubbed “scholars”), and both parties share the SLP generated.
Axie Infinity has built a new digital ecosystem that continues to grow. However, if players are more interested in cashing out than playing for money, SLP prices suffer. It’s been like this for a while. Assume it reaches a point where players on scholarship find SLP (after profit sharing) significantly less valuable. In that case, they may not play the game at all.
Sky Mavis has recently sold virtual land for 550 Ether (ETH), or $2.3 million. It also plans to hire developers to create new games, hoping to attract players drawn in by the game rather than the money aspect. But whether this will boost SLP’s price in the future is unknown.
The gaming industry appears to benefit more from blockchain. It is possible that the current altcoin season will continue into 2022 with new developments, particularly the Metaverse, causing market dominance to shift.