Bitcoin Breaks Downtrend – How Will the Gamefi Industry React?

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Bitcoin Breaks Downtrend – How Will the Gamefi Industry React?

With Bitcoin officially closing above the long 3 month downtrend since the November 2021 all time high, we might be able to see some recovery on the Gamefi industry. In previous cycles, this would already mark the start of the 2 year bear market. The interesting part is that the cryptocurrency industry as a whole has evolved and there are many projects that are actually thriving.

Let’s take a look at how some of the Gamefi heavy main cryptocurrencies are doing after the breakout.

Ethereum (ETH)

While Bitcoin retraced about 53% off its highs, Ethereum more or less retraced the same amount, roughly at 55%. In the previous 2018 cycle, Ethereum tanked 94% while Bitcoin did -84%. This to me signals that they both are establishing themselves as a more mature market and I personally think that a similar retracement is highly unlikely since the institutions are involved.

Games such as Illuvium and Axie Infinity are key players in this ecosystem, although Axie has moved to Ronin for cheaper transaction fees. One of the big issues with ETH is the high gas fees, and that has created an opportunity for other projects like Binance, where many play to earn games have chosen to launch there instead.

Binance (BSC)

Binance, much like ETH, has also retraced 51% off it’s highs. It has held up better than both Bitcoin and Ethereum, although it didn’t make a new all time high. With Binance Smart Chain (BSC), many games are starting to launch here in 2022. It remains to be seen how new game launches will be affected if Bitcoin does not go back into a bull market in 2022.

https://dappradar.com/rankings/protocol/binance-smart-chain/category/games

Most of the top performing games have been hit hard and retraced over 80%. Since Gamefi is such a new industry, it is no surprise that it is going through it’s own bear market that looks quite similar to Bitcoin’s early 2018 bear cycle. Bomb Crypto, which is one of the top BSC games, has gone from $8.85 highs back down to $1.54 at the time of writing. Mobox also followed the same fate as well.

Avalanche (AVAX)

https://avaxnftstats.com/

Avalanche is also a good project that has very cheap transaction fees and fast speed, which is ideal for games. Since this is still a very new ecosystem, it has retraced about 65% off it’s highs. Many of the NFTs are also in this ecosystem, alongside up and coming new NFT games that are launching here. One of the Harmony games, Defi Kingdoms, is planning to have a cross chain launch with Avalanche, which will improve the adoption of both cryptocurrencies.

2 popular games Police & Thief and chikn have continued to do well despite their tokens dropping heavily in price.

Solana (SOL)

Another popular platform for games, there are not many that are currently launched. However, in 2022, some just started their pre-sales and many are still in development.

Many games are coming out on Solana soon.

Like many of the “middle cap” cryptos, Solana retraced about 68% off its highs. Last month, Solana had a lot of instability issues.

Solana, one of the largest blockchain networks, was hit by instability during a turbulent week for cryptocurrencies. The issue experienced by validators that use their computing power to help verify the network was caused by excessive duplicate transactions, according to a notice on the Solana website dated Jan. 22

How will this affect the ecosystem long term is hard to predict, but it needs to be able to handle these issues eventually to establish itself as a top tier network.

Harmony (ONE)

Harmony, much like Solana, also have come into network issues. With Defi Kingdoms as the leading popular game in the ecosystem, it ran into multiple network issues and was down for a day in January 2022 as well. It will need to improve transaction speed overtime to be able to handle high volume transactions for MMO/Strategy games to work on the ecosystem.

Harmony also retraced roughly 65% off it’s highs and it seems to me that although it being a relatively young project, it has done well considering it was trading at 0.001 during the co-vid crisis.

Conclusion

As more and more games launch on these smaller ecosystems and doing cross chain launches, Gamefi will continue to evolve and if we do go into a 2 year bear market, it will be interesting to see how it performs.

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