Cointelegraph Consulting: Gaming tokens usher in altcoin season
Gaming tokens are preceding an altcoin season with substantial rallies as the DeFi sector posts losses against Bitcoin.
While Bitcoin remains in a cool-off period after thrusting to its all-time high in early November and the decentralized finance (DeFi) sector in an apparent dry spell, gaming tokens seem to have taken the spotlight as massive gains are seen across the industry.
The Sandbox’ SAND captured headlines as it spearheaded the enthusiasm for gaming tokens, with over 340% gains in the past month. Another one is GALA, with a similar 300% rally in November. Such coins, including those under the metaverse sphere like Decentraland’s MANA and Illuvium’s ILV, gained momentum after Facebook’s rebranding to Meta, suggesting that gaming tokens could be preceding a new altcoin season.
An altcoin season is defined as when a majority of the top altcoins outperform Bitcoin (BTC) over a set period. For example, Cointelegraph Markets Pro uses two weeks in its algorithm, and it currently broadcasts a 40% reading in favor of altcoins. This means altcoins have fared better than BTC over the two-week time period.
However, the top 10 cryptocurrencies by market capitalization had mixed results against BTC over the past month, and it is the leading tokens in the gaming sector that outclassed Bitcoin. SAND, of course, has been the frontrunner since October, but Axie Infinity Shards (AXS), Enjin Coin (ENJ), ILV and Ultra’s UOS had better gains compared with Bitcoin throughout November.
An investment in ILV back in September would be up by more than threefold and one in SAND by at least sevenfold. Overall, most of the tokens in the gaming sectors have appreciated by more than 100% against Bitcoin in the last month.
Why did gaming tokens take off?
The apparent popularity of gaming tokens stems from the marriage of cryptocurrencies and gaming. The two are forging a new ecosystem where crypto enthusiasts and gamers intertwine. Most are aware of Axie Infinity by now, as the Pokemon-like game exploded in popularity due to its play-to-earn (P2E) model. Initially, players breed monsters called “Axies” using experience points rather than a “currency” within the game. The Smooth Love Potion (SLP) token was not introduced until the release of the Community Alpha on Dec. 19, 2019. From there, the game picked up steam, particularly among developing countries like the Philippines since it provided a way to earn income amid the pandemic last year.
Moreover, nonfungible tokens also play a part in the success of the sector. The NFT hype was hot on the heels of 2020’s DeFi summer, and 2021 has been its breakout year. While artworks and collectible items gained the most publicity early on, games like Axie Infinity and Dark Country buffered the industry in May’s market downturn.