The head of research at the digital asset marketplace Matrixport, Markus Thielen, predicted that soccer fans’ enthusiasm for these tokens would fizzle out quickly.
In the Qatari desert, the market for fan tokens, a volatile concoction of cryptocurrency and sport, is heating up.
The soccer World Cup, which started on November 20, has stoked interest in this specialized breed of cryptocurrency, which is generally associated with sports clubs like Barcelona or Brazil.
According to Kaiko, a Paris-based cryptocurrency analytics company, the average daily trading volumes for these tokens increased to almost $300 million in November from $32 million the previous month.
The volume has increased by ten times, which is significant for these coins, according to research analyst Dessislava Aubert.
These tokens provide certain consumers the opportunity to support their team and get benefits like the possibility to win prizes and the ability to choose the music played during games. Others see the tradeable coins as a fresh potential for investing.
But it takes a courageous investor to try to draw any logical connections between fluctuating coin values and actual occurrences.
In the wake of the team’s shocking loss to Saudi Arabia in their opening World Cup game, the Argentina team’s token dropped 25% to $5.26. However, following the team’s subsequent victory over Mexico, which gave fan comfort, it has fallen another 22%.
The value of Cristiano Ronaldo’s Portugal coin increased by 119% to $7 in the ten days before the tournament, but it subsequently dropped by almost half even though the team was unbeaten and in the first place of its group going into Monday’s match against Uruguay, which it won to advance to the knockout round.
In club football, despite their sparkling rise to the top of the English Premier League, Arsenal’s token has dropped 12.5% to $1.68 since the season began.
Researchers claim that the general state of the cryptocurrency market is partially to blame for price declines and that investors’ aversion to risk has caused the flimsy assets to wither.
According to statistics from CoinGecko, the total market valuation for fan coins increased to $401 million on the first weekend of the World Cup from $256 million around 10 days earlier, but it has since dropped back below $300 million.
People shouldn’t purchase the coins primarily with the intention of making money, according to Siddharth Jaiswal, founder, and CEO of Sportzchain, which predominantly releases tokens for the Asian market.
The icing on the cake, in his words, is that the tool is accessible via the blockchain and may be readily sold in the future, giving it financial significance.
But the first impression should never be that you are purchasing the fan token to make money.
The largest participant in this sector of the cryptocurrency market is Socios, which is supported by Messi. The majority of fan coins may be traded easily because of this, which describes purchasing such tokens as joining a loyalty program with special rewards.
The Portuguese and Argentinian national teams, as well as some of the largest football clubs in the world, have released tokens funded by Socios. These clubs include Paris Saint-Germain, Manchester City, Inter Milan, and Atletico Madrid.
Prior to the World Cup, trading volumes for the Socios-linked token Chilliz, which users purchase in order to trade with their team tokens, reached a seven-month high. However, they have subsequently dropped 40% from that peak.
