Nov 29 (Reuters) – A volatile cocktail of fen tokens, crypto and sports is heating up in the Qatari desert.
Interest in this particular breed of cryptocurrencies, which are usually associated with sports teams like Barcelona or Brazil, has been boosted by the soccer World Cup, which starts on November 20.
According to Paris-based crypto data firm Caico, the average daily trading volume for these tokens has risen from around $32 million in November to around $300 million.
“So we have a 10-fold increase in volume which is huge for these tokens,” said research analyst Desslava Obert.
For some buyers, these tokens provide an opportunity to engage and win prizes and vote on songs played in matches. For others, tradable coins provide a new investment opportunity.
It is a brave investor who will try to find any sensible connection between random coin prices and real world events.
The token for Lionel Messi’s Argentina team fell 25 percent to $5.26 after losing to Saudi Arabia in their first game of the World Cup. Yet it has dropped another 22 percent as the team’s victory over Mexico has given fans relief.
Cristiano Ronaldo’s Portugal rallied 119 percent to $7 in the 10 days before the tournament but then nearly halved even though they were unbeaten and topped their group heading into their clash with Uruguay on Monday. . They won and reached the knockout stage.
Similarly in club football, Arsenal’s token is down 12.5% since the start of the season to $1.68 despite their impressive run in the English Premier League.
The broader crypto market malaise is partly to blame for the drop in prices, according to researchers who said volatile assets were wilting as investors averted risk.
According to data from CoinGecko, the total market cap of fan coins reached $401 million on the opening weekend of the World Cup, up from $256 million about 10 days earlier, but has since fallen below $300 million. has gone
Siddharth Jaiswal, founder and CEO of Sportzchain, which issues tokens primarily for the Asian market, said that people should not buy coins primarily to make money.
“The cherry on the cake is that it’s a tool, available on the blockchain that can be easily traded in the future, so there’s a financial connotation attached to it,” he added.
“But the first thought should never be that you’re buying Fen Token from a profit-generating perspective.”
Socios, promoted by Messi, is the biggest player in this slice of the crypto industry. It mostly facilitates the trading of fincoins, describing the purchase of such tokens as joining a loyalty scheme with special benefits and rewards.
Some of the world’s biggest soccer clubs have launched tokens with support from Socios, including Paris Saint-Germain, Manchester City, Inter Milan and Atlético Madrid, as well as the Portuguese and Argentine national teams, with market caps ranging from around $7 million to $21 million. are up to Million.
Trading volume for Socios-linked token Chilliz, which users buy to trade with their team’s tokens, hit a seven-month high in early November ahead of the World Cup but has since fallen from that peak. 40% have withdrawn.
When looking at the breakdown of trading in Chiles tokens by fiat currency, the Korean won dominates with more than 87 percent of its total fiat volume in early November, according to Kaikou data.
The rise in fan tokens comes at a time of turmoil in the crypto market, which is reeling from the collapse of major exchange FTX earlier this month. Bitcoin is trading near a two-year low of $16,245.
While the FTX fiasco has raised serious questions about the lack of regulation in digital assets, fan coins — which some issuers say fall under the category of utility tokens — remain a gray area.
“Tokens that don’t offer enough utility may face some regulatory scrutiny, because that would suggest that the token is an investment in the club,” said Marcus Soterio, an analyst at digital asset broker Global Block.
“However, if the token offers special benefits and focuses on the utility it provides to its fans, I don’t think there will be regulatory issues.”
Socios said he believes in regulation to give fans confidence and transparency.
In August, Britain’s advertising watchdog upheld a ruling against Arsenal over two ads about fan tokens published on the club’s website and Facebook that it deemed misleading and irresponsible, although the club He denied it.
Interest in these tokens among soccer fans may be short-lived, said Marcus Thielen, head of research at digital assets platform MatrixSport.
“Companies and teams that are selling these tokens must now offer higher prices at regular intervals, otherwise consumer interest will wane very quickly after the World Cup.”
Reporting by Medha Singh and Lisa Metkal in Bengaluru; Editing by Praveen Char
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