SOLUTION: insert WLR_NO_HARDWARE_CURSORS=1 in /etc/environment
The cursor is upside down and also lower than where it should be.
I'm running sway in a qemu VM. I installed using archinstall, using polkit. Did some googling, couldn't find a solution. Something to do with wayland apparently. I'm using the Vmware/Vbox drivers provided by the archinstall script (I assumed this included other VM providers).
Any ideas?