Gucci Goes Crypto with US Stores to Start Accepting Crypto Payments

Key Insights:

  • On Wednesday, Gucci announces plans to begin accepting crypto in US stores later this month.
  • Gucci has been a trailblazer in the digital asset and virtual space.
  • Five US stores will accept payments in more than 10 cryptocurrencies, including DOGE and SHIB.

Gucci and the fashion industry have been long-standing advocates of digital assets and virtuality.

Fashion brands have ramped up Web3 activity in 2022, with some big names filing Metaverse-related trademark applications.

While some fashion houses play catch up, Gucci has been a Web3 trailblazer. News of Gucci making a move to begin accepting crypto payments aligns with the brand’s Web3 position.

Gucci to Launch Polit Program to Accept Crypto Payments in US Stores

On Wednesday, news hit the wires of Gucci launching a pilot program to begin accepting in-store crypto payments.

According to Vogue Business, Gucci will begin the pilot scheme at the end of May. Stores will share QR code links to shoppers via email to enable payments from crypto wallets.

Stores will accept crypto payments in more than 10 cryptos, including Bitcoin (BTC), Bitcoin Cash (BCH), Dogecoin (DOGE), Ethereum (ETH), Litecoin (LTC), Shiba Inu Coin (SHIB), Wrapped Bitcoin (WBTC), and five USD pegged stablecoins.

Five stores will reportedly form part of the pilot scheme, these being Gucci stores on Wooster Street (New York), Rodeo Drive (Los Angeles), Miami Design District (Miami), Phipps Plaza (Atlanta), and The Shops at Crystals (Las Vegas).

Gucci plans to extend the pilot scheme to all North American stores by the summer.

It is not Gucci’s first foray into the virtual space. In February, Gucci purchased LAND in The Sandbox (SAND). Based on Gucci Vault, attendees can buy and use fashion items in the Metaverse.

On Gucci Vault, the fashion house also launched a Discord and the Gucci Grail, and the SuperGucci NFT collections, available on OpenSea.

The relationship with Web3 started much sooner, however. In 2021, Gucci and Roblox hosted the Gucci Garden, a virtual version of a real-world installation in Italy. Gucci Garden consisted of themed rooms in commemoration of Gucci’s centenary.

For the crypto market, the increased adoption of Web3 continues to support cryptos, including SAND.

The Sandbox Price Action

At the time of writing, SAND was down 0.86% to $2.41. A bearish morning session saw SAND fall to an early morning low of $2.40.

Gucci and other big names deliver SAND price support
A move through to $2.5 would give the bulls a look at $3.0 near-term.

Technical Indicators

SAND will need to avoid the day’s $2.34 pivot to target the First Major Resistance Level at $2.55. SAND would need broader market support to return to $2.50.

In the event of an extended rally, SAND could test the Second Major Resistance Level at $2.67 and resistance at $2.70. The Third Major Resistance Level sits at $3.00.

A fall through the pivot would bring the First Major Support Level at $2.22 into play. Barring an extended sell-off, SAND should avoid sub-$2.20. The Second Major Support Level sits at $2.00.

SANDUSD 050522 Hourly
Steering clear of the pivot would support another bullish session.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. SAND sits below the 100-day EMA, currently at $2.47. This morning, we saw the 50-day EMA narrow to the 100-day EMA, delivering support. The 100-day EMA flattened on the 200-day EMA; SAND neutral.

A move through the 100-day EMA would support a return to $2.60.

SANDUSD 050522 4-Hourly
A move through the 100-day EMA would bring $3.0 levels into play.

BTC Markets Goes Couture in Australian Fashion Week Partnership

Key Insights:

  • Australian crypto exchange BTC Markets partners with Afterpay Australian fashion week (AAWF) to deliver couture NFTs.
  • In collaboration with Australian fashion designer Daniel Avakian, AAWF will bring together the physical and virtual worlds of fashion.
  • Australian fashion week follows a 4-day fashion week in March, where big names, including Estee Lauder, debuted in Decentraland (MANA).

This year, we have seen the fashion industry continue to embrace NFTs and the metaverse. Fashion houses including Louis Vuitton, Gucci, and Victoria’s Secret are no stranger to NFTs and the metaverse.

With the fashion industry seeing NFTs and the metaverse as a reach to the global couture audience, NFT activity and virtual shows are on the rise.

BTC Markets Partners with Australian Fashion Week to Launch an NFT Dress

Today, BTC markets announced that it is the ‘Official Partner of Afterpay Australian Fashion Week.’

Via Twitter, BTC Markets tweeted,

“A week-long exhibition of Australia’s incredible designers will collide with #crypto, with lots of cool giveaways to come – watch this space!”

 

This year, Afterpay Australia Fashion Week will run from May 9-13.

Once more, crypto exchanges eye major events as opportunities to build brand awareness and engage with target audiences.

BTC Markets CEO Caroline Bowler shared the announcement on Twitter, tweeting,

“Taking Crypto to the Catwalk! Another first from @BTCMarkets – official Cryptocurrency partner for Afterpay Australian Fashion Week. We’ve also got an awesome collab with Daniel Avakian to share along with lots of other goodies to announce!”

Bowler will also be a speaker at Afterpay Australia Fashion Week’s “The Talks” on Tuesday, May 10.

Australia Fashion Week announced the event stating,

“Fashion week has entered the metaverse, with NFTs and augmented reality gaining popularity amongst consumers who want more ways to shop and engage with brands. The session will break down the fashion-tech trends.”

AAFW Follows Fashion Houses into the Metaverse

It has been a busy 2022 for fashion as more major fashion houses embark on the virtual journey.

In March, Vogue and UNXD collaborated to deliver a four-day fashion week on Decentraland (MANA) titled MVFW.

Visitors and global brands virtually attended fashion shows, live music events, and after-parties. Attendees could also buy and wear digital clothing, with some digital catwalk collections redeemable for physical pieces.

Big Brand names, including Gucci, have paved the way for the broader fashion industry. In May 2021, Gucci and Roblox hosted “Gucci Garden,” a virtual version of a real-world installation in Italy, which offered themed rooms to commemorate Gucci’s centenary.

In February, Gucci announced that it purchased LAND on The Sandbox (SAND). Gucci planned to offer interactive fashion experiences, where attendees could buy and use fashion items in the metaverse.

Nike and RTFKT Go to the Metaverse with CryptoKicks Sneakers

Key Insights:

  • Nike and RTFKT launch CryptoKicks sneakers collection for the Metaverse.
  • In December, Nike bought NFT Sneaker shop RTFKT to drive its web3 goals.
  • Nike went Metaverse in 2021 with ‘NIKELAND’, where players can dress their avatars in Nike products.

As the year progresses, activity in the metaverse continues to gather momentum, with mainstream players identifying web3 as the future.

Metaverse-related trademark filings have been rampant, with Web3 offering endless growth opportunities.

When U.S banking giants JPMorgan and Citi get bullish it is hard to ignore.

In February, JPMorgan put its money where its mouth is, buying land in Decentraland (MANA). JPMorgan projected the Metaverse to deliver over $1 trillion in Metaverse-related yearly revenues.

Last month, Citi delivered a more bullish outlook, projecting a $13 trillion Metaverse by 2030.

NIKE and RTFKT Hit the Metaverse Running with CryptoKicks

Overnight, RTFKT Studios hit Twitter to share a video of the new RTFKT x Nike Dunk Genesis CryptoKicks.

RTFKT tweeted,

“RTFKT, together with Nike CryptoKicks, introduce the future of Sneakers, powered by Skin Vial tech.”

RTFKT and Nike CryptoKicks launch with EVO X, a collection that allows users to change their look with Skin Vials. Skink Vials are collectibles that users can swap.

Collectors can view the Ethereum (ETH) based Skin Vials and RTFKT X Nike Dunk Genesis CryptoKicks Sneakers on OpenSea.

According to OpenSea,

“When equipped with RTFKT Skin Vial NFT, the look of the RTFKT X Nike Dunk Genesis CryptoKicks changes according to the traits of the vial.”

At the time of writing, there were 878 owners with a floor price of 2.79 ETH.

Nike Becomes a Web3 Trailblazer with the Latest Launch

Leading apparel and sports brand Nike is no stranger to web3. In November, Nike went Metaverse with the launch of ‘NIKELAND’, Nike’s Metaverse home on Roblox Corp.

Nike announced the launch of NIKELAND in November, saying,

“Buildings and fields inside NIKELAND are inspired by Nike’s real-life headquarters and hold detailed arenas for the Roblox community to test their skills competing in various mini-games.”

Players can also dress their avatars in Nike products and play games, including Tag, Dodgeball, and The Floor is Lava.

Soon after the launch, Nike purchased NFT sneaker creator RTFKT. Nike purchased RTFKT to support its metaverse goals following the launch of NIKELAND.

There are no other details relating to the CryptoKicks launch, but the RTFKT X Nike Dunk Genesis CryptoKicks could make their way to the NIKELAND digital showroom.

Why Roblox Stock Is Down By 24% Today

Roblox Stock Retreats After Disappointing Earnings Report

Shares of Roblox gained strong downside momentum after the company released its quarterly results.

The company reported revenue of $568.8 million and a GAAP loss of $0.25 per share, missing analyst estimates on both earnings and revenue. Importantly, the company’s bookings of $770.1 million have also missed analyst estimates. Average Daily Active Users (DAUs) totaled 49.5 million, up 33% on a year-over-year basis, while Hours Engaged grew by 28%.

The market expected better results from the company which is viewed as one of the leading metaverse plays by many traders. As a result, Roblox stock declined from $73 to $55.

What’s Next For Roblox Stock?

Roblox is in the growth phase, and the company is not expected to become profitable in the next few years.

Metaverse-related stocks have been moving lower in recent months. Meta Platforms is down by almost 45% from its peak that was reached back in September 2021, while Unity, the owner of a popular game engine, is down by almost 50% from the highs that were reached in early November 2021.

The key reason for the major pullback in many growth stocks is the rapid increase in Treasury yields and the anticipation of aggressive moves from the Fed.

In this environment, Roblox has to show strong growth to keep the bullish thesis alive. At the first glance, Roblox’s growth remains strong, as the company’s revenue increased by 83% on a year-over-year basis in the fourth quarter of 2021. However, it’s the market that decides whether the company’s growth is strong enough, and it is clear that traders expected better numbers.

In case the general market pressure on growth stocks continues, Roblox stock may gain additional downside momentum in the upcoming weeks. The company’s growth stays strong and Roblox will likely have many opportunities in the developing metaverse segment, but the near-term trend of its stock will change only if the market becomes less hostile towards unprofitable high-growth companies.

For a look at all of today’s economic events, check out our economic calendar.

NYSE Files NFT and Metaverse Related Trademark Applications

The flurry of NFT and the Metaverse related activity continue to hit the news wires this week. As activity grows, trading volumes and lucrative fees also rise, drawing the interest of mainstream market places.

The New York Stock Exchange

Located on Wall Street, the NYSE is the world’s largest stock exchange. Founded under a buttonwood tree in 1792, the exchange evolved from a group of just 24 stockbrokers and adopted its current name in 1863. Ownership was controlled by members, capped at 1,366 since 1953 until members became shareholders in December 2005. In anticipation of a change in structure, some seats on the exchange sold for as much as $4m. Significantly, the exchange was an instrumental part of the U.S industrial revolution.

On the regulatory front, it was the 1929 crash that placed the NYSE under the purview of the Securities and Exchange Commission (SEC).

The NYSE and U.S Companies Pave the Way for NFTs and the Metaverse

Ahead of the NYSE application, a number of U.S listed companies have filed similar trademark applications. These include Microsoft (MSFT), Warner Brothers (AT&T), and McDonald’s (MCD). Back in April 2021, even the NYSE minted NFTs in celebration of first trades for Coupang, DoorDash, Roblox, Snowflake, Spotify, and Unity. Each NFT is a short video clip providing details of the first trade. The Spotify NFT is viewable on Crypto.com (CRO).

NYSE Looks to Expand to NFTs and the Metaverse

Late last week, the New York Stock Exchange filed a trademark application that suggests new endeavors in NFTs and the Metaverse.

According to the trademark application, the NYSE aims to provide an online market place for buyers, sellers, and traders of:

  • Downloadable digital goods authenticated by NFTs;
  • Virtual and digital assets, artwork, collectibles, and NFTs;
  • Digital currency, virtual currency, cryptocurrency, digital tokens, crypto tokens, and utility tokens.
  • Downloadable digital art images authenticated by NFTs.

Additionally, the application requests for

  • Developing and designing virtual retail stores, virtual stores, and virtual showrooms.

With regulatory scrutiny on the rise, the New York Stock Exchange’s expansion into NFTs and the Metaverse will be an interesting one to watch.

What Does Russia’s Threat Really Mean for Markets?

Russian officials maintain they have no plans to invade and say they are seeking a diplomatic way forward. Western officials don’t fully believe Russia’s claims, pointing to the continued military buildup along Ukraine’s borders. Both sides accuse the other of waging propaganda campaigns and Ukraine itself has made conflicting claims about how high the threat level really is.

Many Russian experts say that Russia’s economy won’t support an invasion of Ukraine and believe that Russian President Vladimir Putin is just trying to squeeze concessions out of the West.

Still, just the possibility of Russia’s oil supplies being interrupted has sent crude oil prices over +$95 per barrel with some insiders warning that an escalation in the standoff could send futures prices soaring to +$150.

Keep in mind, many oil insiders believe crude prices could top $100 per barrel in the near-term even without an armed conflict in Ukraine due to a growing supply deficit. Higher oil prices complicate the inflation fight that the Federal Reserve is now trying to battle.

Federal Reserve policy

While higher oil prices exacerbate inflation, there is nothing that central bank policy can do to impact oil markets. So we have a situation of higher oil prices adding to already high inflation at the same time that the Federal Reserve is preparing to raise interest rates.

Most economists fear this is a recipe for slower economic growth, possibly even recession.

When the Fed said inflation was “transitory” back in the summer of 2020 I doubt they were forecasting “delta” the major second wave of the virus and or forecasting the third “omicron” wave of the virus. I also doubt they thought about Russia and China aggressively flexing their muscles or perhaps even working to pour gas on the inflationary fires that are currently burning.

Nonetheless, here we are with investors talking about perhaps the start of an extended bear market in stocks, i.e. in 2000 the S&P 500 was down -9%, in 2001 it was down by another -13%, and ended in 2002 by tumbling another -23%. I’m certainly not saying we are going to repeat the dot.com bubble bursting but there is a chance we could continue to make lower highs and lower lows until the market is more certain about Fed policy and their rate of change and more certain about some of the geopolitical jockeying that could keep inflation hotter than some bulls have been forecasting.

St. Louis Fed President James Bullard told CNBC yesterday that the Fed needs to accelerate its pace of rate increases and repeated that he would like the Fed to raise its policy rate by 100 basis points by July. Bullard said previously that he supports starting with a 50-basis point rate hike in March and would like to see the central bank begin reducing its balance sheet by the end of Q2.

It’s worth mentioning that the “minutes” for the Fed’s January meeting will be released tomorrow which is guaranteed to be the most hawkish narrative to come out of the central bank since the start of the pandemic. It’s not likely to provide much in the way of clues as to what the Fed’s next move might be but it could provide some indication as to how many members are firmly planted in the aggressive policy tightening camp.

Data to watch

Today, bulls are nervous that the Producer Price Index could further stoke inflation fears if the gauge comes in higher than the +9.2% year-over-year rate that Wall Street is expecting. The December read did show signs of price pressures starting to ease but most of that was credited to lower energy prices in early December, which as we know have only marched higher since. Also due out today is Empire State Manufacturing.

Earnings today include Airbnb, Glencore, Invitation Home, Marriott International, Novozymes, Restaurant Brands, Roblox, ViacomCBS, and Zoetis. For full disclosure I still own shares and continue to be a long-term investor in Airbnb, Roblox, and Zoetis.

For a look at all of today’s economic events, check out our economic calendar.

What Moves the Stock Market This Week?

A new 40-year high read on consumer inflation last week now has Wall Street thinking the Fed might be even more aggressive with rate hikes. At the same time, investors continue to closely monitor the geopolitical headlines involving Russia and Ukraine. From what I’ve heard, there were a lot of diplomatic phone calls over the weekend, including one between Biden and Putin, but nothing seems to have changed in regard to Putin’s “poker face”.

Political tensions

Some military insiders continue to warn that Russia could now invade Ukraine at a moment’s notice. Some are saying it happens this week while others say Russia will invade after the Winter Olympics.

To add even more worry and concern, several geopolitical groups are thinking Russia and China are somewhat collaborating on strategy. This isn’t really anything new but the “buzz” and rumors are starting to get louder.

The big what if… what if Russia was to make a move on Ukraine and China a move on Taiwan in a coordinated effort? I don’t really think that happens but there’s always a possibility. Perhaps a more worrisome theory is Russia and China working together on economic warfare strategies to knock the US dollar out of its leadership role as the world’s currency.

Russia has a good hold on energy supply and China is the world’s biggest influence on the global supply chain. If Russia can withhold energy and China slows the supply chain, theoretically they could create a major wave of inflation. If at the same time, they continued to dump US Treasuries in a big way they could weaken the US dollar enough to bring into question its role as the world’s reserve currency, especially with our debt level so elevated.

The theory continues… if the US dollar was to weaken enough some exporting countries and global businesses might start to question the value of their goods being sold at a discount when the transaction is settled in US dollars.

Hence more longer-term economic concern.

Interest rate hikes

More large Wall Street insiders are talking about perhaps +5 to +7 Fed rate hikes ahead in order to slow domestic inflation. The big questions remain… how fast will the Fed shrink its balance sheet and how long before they will stop raising interest rates? St. Louis Fed President Bullard last week expressed support for a 50-basis points hike, though several other Fed officials have since argued against the idea.

Fed speculation has also brought increased volatility to bond markets with yield on the 10-Treasury topping 2% on Thursday but ending Friday a full 10-basis points lower. The 2-year yield saw its biggest one-day move since 2009, surging 26 basis points at one point on Thursday. Those are pretty dramatic swings for bond markets and highlights the extreme level of uncertainty that is plaguing financial markets.

Just keep in mind however, from the summer of 2016 to the fall of 2018, 10-year Treasury yields jumped from 1.4% to over +3.0% yet the NASDAQ was still able to increase by over +45%.

On the energy front, there continues to be talk of tighter global oil supply and higher prices ahead especially if we see military action between Russia and Ukraine. Remember, increased energy costs can quickly spread through an entire economy as manufacturers pass along higher production and transportation costs in the form of higher consumer prices. Consumers also get dinged at the gas pump as well as with higher heating and cooling costs.

With inflation already smoking hot at +7.6% and Consumer sentiment starting to waiver the market is starting to get more nervous about higher energy costs. Worsening consumer sentiment can be an early warning signal of a decline in consumer spending. However, bulls still largely expect a boost in consumer spending as the Omicron Covid wave continues to fade, pointing to the massive amount of savings and increased asset values that consumers have accumulated over the past couple of years.

Most believe that spending will shift more toward “services” and away from goods, which in turn is expected to help further ease some of the strain on supply chains and start to cool prices. Supply chains have shown slow but steady improvements, especially in the last couple of weeks as Covid cases have plunged, which most economists think will should start slowing the rate of monthly inflation gains.

By March, inflation reads will be up against much higher year-ago data which should also help to bring down the rate of monthly increases, at least in theory. And if inflation starts showing signs of coming down on its own, that would likely decrease pressures on the Federal Reserve to resort to more aggressive tactics to tame inflation.

There is no major economic data today but investors are anxious about the Producer Price Index for January due out tomorrow. The bigger economic headlines this week include inflationary data out of China and US retail sales on Wednesday morning.

The Fed FOMC minutes are also being released Wednesday afternoon. The earnings this week include Airbnb and Roblox on Tuesday; Cisco, Nvidia, and Shopify on Wednesday; Palantir and Walmart on Thursday; and Draft kings and John Deere on Friday.

Victoria’s Secret Plans NFTs and Entry into the Metaverse

Mainstream corporate interest in NFTs and the Metaverse has continued going into February.

This is in spite of a sharp fall in NFT trading activity through the early part of February. NFT trading activity had hit an all-time high in January, with OpenSea leading the way.

Major Brands Continue to Go NFT and Metaverse

In recent weeks, a number of major brands and corporations have filed for NFT and Metaverse-related trademarks.

Last week, we reported Gucci’s LAND purchase in the Sandbox (SAND). Back in 2021, Gucci had already collaborated with Roblox to host the “Gucci Garden”. This was a virtual version of a real-world installation in Italy, offering themed rooms in commemoration of Gucci’s centenary.

Major brands have also been embracing non-fungible tokens (NFTs) in rising numbers.

Gucci was among the first luxury fashion houses to sell NFTs, with Louis Vuitton, Prada, and sports brands Adidas and Nike also active in the NFT space. The rise in interest has been so significant that Nike purchased digital collectibles and sneakers creator RTFKT last year.

With Gucci and the likes of McDonald’s and Warner Music Group entering the Metaverse, it was only a matter of time before fashion week took to the Metaverse. Last week, Vogue Business announced on Twitter a 4-day digital fashion week in Decentraland (MANA) commencing 24th March.

Global brands and visitors will be able to virtually experience fashion shows, attend live music sessions and the after-parties. Attendees can also buy and wear digital clothing directly from catwalk avatars.

Some of the digital catwalk collections can be redeemed to receive the brand’s physical pieces. Buyers will need an Ethereum (ETH) wallet to purchase clothing.

Following last week’s news, beauty and lingerie powerhouse Victoria’s Secret joins the growing list of leading brands to enter the Metaverse.

Victoria’s Secret Plans Metaverse Debut

On Sunday, Mike Kondoudis, a trademark attorney, announced on Twitter trademark applications made by Victoria’s Secret.

According to Kondoudis, Victoria’s Secret “plans to offer digital collectibles and media created with blockchain tech and online clothing and media for use in virtual environments”. Victoria’s Secret filed the applications on 8th February.

The Sandbox Price Action

On Sunday, SAND slid by 3.79% to end the day at $4.06. Risk aversion stemming from the rising risk of Russia invading Ukraine weighed on SAND and the broader crypto market.

At the time of writing, SAND was down by 3.59% to $3.916. A move through February’s high $4.87 would bring January’s high $6.03 into play. SAND would need plenty of support from the broader market, however, for a breakout from $5.00 levels.

A move back through to $6.00 levels would then give SAND a clear run at November’s ATH $8.48. Breaking down resistance at $7.00 would be key, however. Geopolitical risks will need to subside to support the more bullish SAND price predictions.

SANDUSD 140222

META: Specifically for Metaverse Exposure but Not Yet Convincing

After Mark Zuckerberg renamed Facebook to Meta Platforms (FB), the metaverse has suddenly become a hot topic with search interest on Google Trends peaking at a value of 100, signifying immense popularity. However, there is currently no universally accepted definition of the metaverse apart from some key words like “virtual reality”, or “advanced Internet”. Learning from Blockchain’s world where there are already metaverse projects like Sandbox where land can be exchanged against payments of millions of dollars, it could be defined as a virtual universe with a functional economy.

Of course, this definition is not straightforward and to be frank, no one knows exactly what shape the metaverse will take. But, for investors willing to invest hard-earned money in ETFs like the Roundhill Ball Metaverse ETF (META), it is important to understand which sectors are most likely to benefit. Some use cases are already being proposed such as attending a virtual concert, taking an online trip or creating digital art in the form of blockchain-powered NFTs or Nun Fungible Tokens.

Now, these applications will require a lot of computing power due to increased utilization of artificial intelligence and augmented reality (“AR”). At the same time, for communication purposes, there will be requirement for next generation Wi-Fi and 5G. Roundhill Investments does list some sectors like Compute, Networking, Virtual platforms, Interchange standards, etc from where they choose companies to be included in their fund, but for illustration purposes, I provide a chart which I recently used it in an article on VanEck Semiconductor ETF (SMH).

Description: https://responsive.fxempire.com/v7/_fxempire_/2021/12/word-image-274.png?func=cover&q=70&width=436

Source: Chart prepared by author using data from IEEE Spectrum and augmented to highlight metaverse demand

This chart basically shows semiconductor revenues per sector (with most coming from computing at 34.5%), but, since I have highlighted the technologies needed to build the metaverse, I use it to explore how META’s holdings fit the “meta” investment rationale.

The META rationale

First, META tracks the Ball Metaverse Index, the first index designed to track the performance of the metaverse.

Second, the ETF’s main holding is NVDIA (NVDA) at 8.34% of total assets, also happens to constitute a significant chunk of SMH’s basket. Now, as a designer of graphics processing units for the gaming and Bitcoin markets, this chip play whose products are vital for computing should be one of the main beneficiaries as a building block for everyone’s “virtual space”. Additionally, NVDIA is a system-on-a-chip unit’s provider for the mobile computing and the automotive industry.

Third, there is FB itself, and with more than 2.9 billion users as at the third quarter of 2021, and its success as a highly addictive social networking brand, there is no doubt that it will profoundly change our lives by rendering more virtual than ever, helped by a Covid-induced restriction in physical interactions.

https://static.seekingalpha.com/uploads/2021/12/26/49663886-16405745860315373.png

Source: RoundHill Investments

As for software plays like Microsoft (MSFT), Autodesk (ADSK), Unity Software (U), the metaverse is already proving to be a game-changer for working from home due to Covid. Continuing along the same thought process, instead of seeing their colleagues on a video call screen, employees could join them in a virtual office. Here, one of the main benefits of the metaverse is believed to be “presence,” meaning the feeling of physically engaging places and characters instead of looking at them through a laptop or smartphone screen.

Coming to Apple (AAPL), it has one of the world’s largest AR platforms with hundreds of millions of AR‑enabled devices, as well as thousands of related apps on the App Store. Now, one of the essential building blocks of the metaverse is interoperability whereby users must be able to move throughout the metaverse, while effortlessly make the transition to the physical world. For this purpose, they need AR devices which are supported by Apple’s iPhones. There is also an analyst forecasting that Apple’s “mixed reality headset will come out in the late 2022 or early 2023”, with the Apple Glasses to follow in 2025.

Apple should also benefit through its gaming division just like Roblox (RBLX), an online game platform which allows users to play games created by other users. In a metaverse scenario, one can envisage players retaining their avatar while hopping from one game to another or even a virtual shop for purchasing purposes, regardless of the brand of the user’s device.

After painting an enthralling picture of META, I now address some pain points.

META’s shortcomings

Since the concept of metaverse is relatively new, there will be many use cases that will arise in the future, but the space is also likely to be under intense regulatory scrutiny as lawmakers become wary of the power of big techs at extending their control on our social lives to a further degree through virtual reality. Governments may for example restrict the number of hours we can spend in the metaverse just like China is restraining the number of hours children can play games. Furthermore, Apple with its IOS operating system is only a part of the global smartphone ecosystem and it will have to be a metaverse which also encapsulates the Android operating system by Google (GOOG) with its brand of AR. META certainly includes the Android play, but only at a paltry 1.71% of holdings.

Pursuing further, META does include pioneers in content, commerce, and social for the metaverse, such as Sea (SE), Amazon (AMZN) and Snap (SNAP), and I also noted that it includes web infrastructure companies like CloudFlare (NET). On the other hand, I noted the absence of wireless plays from its portfolio. Also, the fund managers do not mention Industrial 4.0 applications, namely 3D printing which is crucial to allow transition from the virtual to the physical world.

Looking for further support from the share performance side, despite all these hot talks about the metaverse and META having already crossed the $900 million in total assets under management within six months, it managed to produce a meager 2.59% gain during this time. This is dwarfed by SMH or even the Technology Select SPDR ETF (XLK), with both these two funds producing above 17% gains in the same time period.

https://static.seekingalpha.com/uploads/2021/12/26/49663886-16405745860053453.png

Source: tradingview.com

This calls for a dose of realism.

Conclusion

There is no doubt that META is an innovative ETF with its index consisting of a tiered weight portfolio of globally-listed companies who are actively involved in the metaverse, but this whole concept is still new and rapidly evolving. I also like the fact that Roundhill Investments have also included companies like Block (SQ) and Electronics Art (EA), thus showing their perfect understanding of the Blockchain side of things.

Still, I am not convinced as to the percentage of asset held for each stock. Now, as an actively managed fund charging 0.75% in fees, the portfolio is likely to see rapid changes, but at this stage, it is preferable to wait. Finally, those who want early metaverse exposure, both SMH and XLK can be considered as proxy ETFs for this purpose, and come at lower expense ratios of 0.35% and 0.12% respectively.

Disclosure: I am long XLK.

Roblox’s Poor November Numbers Causes Stock Price to Plunge

The video gaming industry is one of the fastest-growing in the entertainment sector. The pandemic helped push the sector, but it might be struggling to keep up the numbers at the moment.

Roblox’s November Numbers Disappoint

Video game company Roblox revealed its user data for November a few hours ago, and it didn’t perform as investors had expected. Roblox recorded 49.4 million daily active users in November, which is below the 50.5 million reported in October.

The 49.4 million for November represents a 35% increase from the same period last year. However, the outage experienced between October 28 and October 31 affected the platform’s performance. The company said it lost more than $25 million in bookings during the outage.

Stifel analysts told investors that “Based on management’s commentary with 3Q21 earnings, including October performance, results came in slightly below our expectations and appeared to trail the historical trend line whereby November typically experiences a modest sequential uptick vs. October.”

The shares of the company dipped by more than 9% after Roblox reported its November figures. By the end of the trading hours on Wednesday, RBLX was trading at $97.87 per share, down by more than 9% during the session.

RBLX Could Record Further Losses

Roblox is expected to record further losses over the coming weeks. According to analysts at KeyBanc, the poor user numbers could extend to December, and that would also affect its total revenue.

RBLX daily stock chart. Source: FXEMPIRE

The analysts said, “Considering management has also said December is roughly 80% larger than the October/November levels, we believe this means 4Q numbers are likely to come down in the immediate term. We were previously looking at roughly $800 million in bookings for 4Q. But if that trend holds, it would seem to indicate closer to $780 million. Our model is under review.”

If Roblox experienced a dip in daily users and revenue, then the stock price could struggle to stay above the $90 mark over the coming weeks.

What Are the Upgradable NFTs and How Can They Benefit Artists, Brands and Metaverses?

And then, of course, we have the NFT-based games, like Axie Infinity, generating $220.3 million in monthly sales and recently raising $152 million in Series B funding round.

It’s clear that NFTs have seen a spectacular rise. As a rule, such a success attracts the attention of innovators from across the industries, thinking about how to expand the applications of new technologies and make it even more lucrative. This time is not an exception. We are now leaving the lullaby of NFTs about to witness the emergence of dozens of variations of non-fungible tokens serving all the imaginable needs of businesses and consumers.

In fact, the first bunch of new “hot” NFTs is already here. Those are upgradable, time-limited, and non-hashed. They seem like perfect tools for artists, brands, and metaverse – a trending concept of a shared multidimensional digital environment, creation of which has been undertaken by Facebook, Fortnite, Sensorium, Roblox among several other players.

So what are these novel NFT types and what exactly can they do for a metaverse?

Driving collaborations in digital space

As the name suggests, upgradable NFTs evolve over time, allowing various players to transform the NFTs and their corresponding content, while refraining its ownership. Such a feature comes in very handy for a whole range of entertainment industries. For creators, this is a promising advancement allowing, for example, an artist or a musician to legitimately take on another creator’s artworks as the basis for their own.

This means that two (or even more) pieces of content can come together into one without the legal and creative headaches we so often see in the non-crypto world. Similarly, global fashion houses can now launch collaborations without the unnecessary bureaucracy or the involvement of third parties. After all, Valentino, Louis Vuitton, and Burberry were among the first companies to embrace crypto, issuing NFTs out of all-digital collections and increasingly experimenting with metaverses through VR and AR in the past year.

Facilitating smart contracts

Non-hashed NFTs permit users to save text details right on the smart contract without the need to write a single line of code. As a concept associated with high technologies and futuristic environments, metaverse implies convenience and lack of bureaucracy. Non-hashed NFTs will significantly facilitate the  administrative procedures among all the metaverse’s participants from users and content creators to developers and investors.

Boosting users’ engagement

Time-limited NFTs serve as a powerful gamification tool to boost users’ engagement. With this type of NFTs, companies could tokenize tickets for virtual events and enhance them with advanced access and expiry settings, permitting attendees to exchange them in the secondary market freely, or keep them as collectibles featuring certain rarity levels.

For example, Fortnite could have used them as an additional long-term tool to engage the attendees of its recent Ariana Grande’s virtual concert, some of whom complained the event ended too soon. Another promising application of time-limited NFT applies to  metaverses, where in-game assets could be tied to specific time frames.

The origins

Noteworthy, the above types of NFTs were in fact unveiled by metaverse developers from Sensorium, the company behind the Sensorium Galaxy metaverse built in collaboration with Jay-Z’s Roc Nation and chart topping artists like David Guetta and Armin Van Buren.

Upgradable, time-limited and non-hashed are all the features of Wakatta, Sensorium’s new blockchain geared specifically for the needs of the entertainment industry. As announced at Token 2049 in London, Sensorium Galaxy will integrate the Wakatta blockchain within a few months to allow users mint virtual beings as NFTs and monetize their creations through a transparent marketplace.

According to Alex Blagirev, Wakatta’s Project Lead, – the Substrate-based blockchain will offer low transaction fees of $0.001 and capacity to handle thousands of transactions per second.

Market on the rise

Although we are yet to see upgradable, time-limited and non-hashed NFTs in action, their future seems very promising as the market for non-fungible tokens has witnessed unprecedented success.  The versatility of NFTs and the fact that they can be integrated across a wide variety of industries has seen investors flocking to the technology. In the first quarter of 2021 alone, the NFT market saw a 2,100 surge when compared to the last quarter of 2020, with sales of these tokens reaching over $2 billion.

The numbers underscore the potential of NFTs – and blockchains are seizing the moment. Take Flow, developed by Dapper Labs following the company’s partnership with the NBA that has led to  NBA Top Shot, a widely popular marketplace for digital basketball collectibles. This has netted the company over $500 million in the first half of 2021. Recently, the company revealed that it would be extending its NFT services to the NFL and other major sports leagues, including Spain’s LaLiga.

Other companies following the same recipe include iconic brands like Marvel whose first foray into the world of NFTs included Spider-Man and Captain American digital collectibles.  Spiderman NFTs worth some $4 million were sold out within 24 hours of launching and other releases have been equally successful.

NFT-marketplaces have enjoyed a similar boom. According to a recent study by DappRadar, the top 30 NFT marketplaces combined have grossed a total of more than $11.53 billion. For instance, in June 2021 alone, OpenSea sold $160 million in digital assets, having a 45x increase in volume growth during the first half of 2021. MakersPlace generated more than $100 million in sales in the past year and witnessed Beeple’s artwork being sold for $69.3 million on its platform.

Bright future

According to the recent study by CB Insights, there are currently over 90 companies involved in metaverse creation. As more brands will turn their attention to metaverse – whether building one or entering it to sell its products and services – the demand for NFTs and its numerous various will continue to grow. Overall, NFTs remain a fairly new technology, and more importantly, a niche opportunity for businesses, investors and users alike. That’s the momentum new players, like Wakatta, are hoping to ride out in this newly-minted market.