The Web3 gaming sector took a hit this week as bearish momentum swept through the broader crypto market.
GameFi saw its total market capitalization tumble by 13%, accompanied by a 21% drop in trading volume. With Bitcoin pulling back to around $106,000 and sentiment turning cautious, several high-profile events sent shockwaves through the ecosystem — none more dramatic than the $100 million liquidation of prominent investor James Wynn.
A handful of high-profile projects managing to keep some semblance of forward momentum, sometimes even growing and expanding, in this market is surprising to see. From a recent unexpected rise by Undeads Games (UDS) right on down to a big Sony blockchain integration, GameFi remains a space full of excitement and tension.
Bearish Winds Hit GameFi Hard
The sell-off in GameFi closely tracked the price dip in Bitcoin. As the price of Bitcoin slipped, so did the values assigned to digital collectibles and other assets within the GameFi universe. Ironically, even as GameStop announced its acquisition of 4,710 BTC, the market didn’t pay much attention and continued its downward trajectory. Meanwhile, the story circulated about James Wynn’s $100 million position in Bitcoin that had been heavily margined, or on leverage. When Wynn’s liquidation hit the news, it appeared to confirm the skeptics’ thesis about the ongoing underdevelopment of the GameFi sector.
As risk hunger diminished, industry-wide red ink ensued. Activity in trading ground to a slow pace, and all eyes diverted back toward secure assets amid an ever-growing uncertainty bubble. The latest downturn for GameFi isn’t solely the result of some sins committed within. It’s also riding the wave of an altcoin dip — one that’s so bad, the Altcoin Season Index dropped from 28 to 22. That means Bitcoin is now, more than ever, in the driver’s seat for market direction.
GameFi’s ascension to the 13th position on DeFiLlama’s protocol tracker may look like advancement, but it is not. This move up the charts occurred less from GameFi’s organic growth and more because other sectors of the crypto world fell even harder. In short, GameFi’s relative position improved. However, the fundamentals of GameFi didn’t get any better.
Undeads Games Shocks Market With +75% Surge
A handful of projects managed to stay in the latest bear market. Undeads Games (UDS), was the clear standout with a wild uptick of 75.51%. What was driving demand for UDS? Speculation and a monster upcoming beta launch in January. Add to this fearless trading activity and investors eyeing the possible value of an upcoming airdrop and you remind the market that GameFi has both speculative and enduring growth potential.
UDS wasn’t solitary in defying the trend. MYRIA similarly attracted attention with a 40.29% increase, spurred on by engagement from the community and fresh developments in the ecosystem. At the same time, MASK maintained its ascent with a 15.13% rise, marking off yet another week in the green and gaining traction among play-to-earn aficionados.
These individual victories, though commendable, hardly made a dent in the overall decline. The majority of GameFi tokens continued to struggle, and many low-cap projects couldn’t seem to attract any attention at all in this trading strategy environment. Right now, GameFi seems to be clustering together a series of quite rare successes.
🚀 Week in GameFi: Hard To Wynn as Bears Bring Down Market.
GameFi tanks 13% as BTC cools off! Wynn gets liquidated for $100M! UDS defies gravity with a 75% rally! Sleepagotchi taps Sony’s blockchain!
Let’s unpack this week’s Web3 gaming shake-up 🧵
1/6 pic.twitter.com/0nJOsdoAgW
— CoinMarketCap (@CoinMarketCap) June 2, 2025
Sony Partnership Boosts Sleepagotchi’s Reach
One of the week’s most hopeful developments came from the Sleep-to-Earn sector, where Sleepagotchi disclosed an important integration with Sony’s blockchain platform, Soneium. The lite version of Sleepagotchi has officially launched on Line, tapping into an enormous user base of over 200 million people.
This partnership isn’t just about distribution — it’s also about ecosystem evolution. Users on Line now have early access to a new points system tied to the upcoming Sleepagotchi 2.0 app. This kind of infrastructure-level integration with a global tech giant like Sony signals a maturation of the Web3 gaming narrative. It also provides a fresh use case for blockchain in wellness and gamified lifestyle apps, sectors that continue to draw both attention and innovation.
The partnership might signify a pivotal moment for GameFi’s aspirations to go mainstream. As established technology and social media companies explore decentralized ecosystems, projects that serve a demonstrable real-world purpose — as opposed to simply being the next hot speculative thing — tend to have a thriving outlook. GameFi is not a currently thriving ecosystem, especially since the top play-to-earn project, Axie Infinity, has become an example more of what not to do than what to emulate.
Final Thoughts:
Reminding that GameFi is still a very volatile, high-stakes arena, this past week saw a push-back against the overall market that had previously seemed to be moving toward a recovery. Even as sentiment tilted decidedly bearish, nevertheless, some individual stories still managed to find their way toward being upbeat. UDS, for instance— previously a deeply obscure project— saw its tokens rally this week; and Sleepagotchi was busy integrating with Sony. What these individual success stories mostly illustrate, though, is the current fragility of the GameFi sector. It’s hard to see sustainable recovery unless and until Bitcoin finds true price stability and the whole altcoin confidence thing returns. Until then, a handful of GameFi tokens still seem to be getting pumped.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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