With the World Cup approaching, football concept coins are sparking a frenzy of speculation

Author: Kyle, Honeypot Tech

The quadrennial FIFA World Cup will kick off on November 21 this year, when fans from around the world will flock to Qatar to witness this global sporting event. Whenever the World Cup approaches, the surrounding football industry experiences a surge, and the fan tokens that have emerged in recent years are also stirring up a wave of speculation ahead of the tournament.

In the past two months, football-themed crypto assets, represented by Chiliz (CHZ), have risen against the trend in the bear market. CHZ has surged from $0.1 to a peak of $0.25, an increase of 240%. The fan tokens of various teams issued on the Chiliz blockchain have also risen collectively, with fan tokens from major clubs like Paris Saint-Germain, Juventus, and Barcelona recently seeing increases of around 50%, while the fan token for the Portugal national team has surged by over 700%.

However, behind the fervent speculation lies the risk of a sharp decline. The "plot" of fan tokens surging before major events only to plummet afterward has played out before. Before last year's European Championship, fan tokens also began to rise four months prior to the tournament, but before the event started, they entered a downward trend, with declines from their peaks reaching as high as 80%.

Currently, the main value support for fan tokens lies in the ability for fans to use these assets to participate in some club decisions. However, it is important to note that fans' rights are limited to voting on the design of peripheral merchandise and obtaining some membership benefits, and they cannot influence player signings or actual operations of the team, which lowers their value ceiling. Additionally, many clubs have not actively promoted their fan tokens after issuance, resulting in limited penetration among fan groups.

Some crypto practitioners have observed that the buyers of fan tokens are not necessarily fans of the clubs; most buyers are crypto enthusiasts. Since the crypto crowd often speculates on football-themed tokens for profit, it is not surprising that these assets exhibit volatile price movements.

Fan Tokens Surge Ahead of the World Cup

With the anticipation of the World Cup, Chiliz (CHZ) has become the most notable football-themed blockchain project in the market recently, also leading in market capitalization under this concept. According to CoinGecko data from September 4, CHZ has a circulating market cap of over $1.14 billion, ranking 50th among crypto assets by market cap.

Chiliz itself, as a sports and entertainment blockchain fintech provider, serves as the foundational blockchain platform for many football clubs issuing fan tokens. Based on this underlying blockchain platform, Chiliz has launched an application called Socios.com, specifically designed for sports fans. On Socios.com, fans can purchase CHZ and exchange it for a club's fan token, allowing them to vote on club matters and even directly participate in management or interact with players.

Currently, Chiliz has partnered with many top football clubs, including Manchester City, Arsenal, Barcelona, Atlético Madrid, Juventus, Roma, AC Milan, Inter Milan, and Paris Saint-Germain, issuing corresponding fan tokens for each team. Last year, the platform also partnered with the Portugal national team, expanding its business scope from club level to national team level.

Chiliz empowers fans with the right to interact with clubs and participate in management affairs through fan tokens, providing solutions for major teams to expand their fan economy and bringing fans closer to their teams. As the 2022 World Cup approaches, CHZ has unsurprisingly attracted funding.

CoinGecko data shows that since the end of July, CHZ tokens have risen against the trend in the crypto bear market, surging from $0.1 to a peak of $0.25, a 2.5-fold increase in less than a month. As of September 4, CHZ has pulled back from its recent peak, priced at $0.21.

In addition to CHZ, various club fan tokens issued on Chiliz have also risen collectively. In the past two months, the fan token for Paris Saint-Germain (PSG) has increased by 48%, Juventus' fan token (JUV) has risen by over 50%, and Barcelona's fan token (BAR) has surged by over 65%. Since the World Cup is a competition between national teams, the fan token for the Portugal national team (POR) has seen an even more astonishing increase, rising from $0.6 to $5.05 in two months, a staggering 741% increase.

Recent Surge in Fan Tokens

Amid the general rise of football-themed tokens, the crypto asset trading platform Binance has also recently launched a perpetual contract for the football fan token index. According to the announcement, this price index will track the market performance of football club fan tokens listed on Binance's spot market.

In fact, this index also provides the market with a new type of speculative target for football concepts. Binance's market page shows that on the day the index launched on September 1, it surged from $1008 to a peak of $1541, a short-term increase of 52.8%, indicating that market speculation sentiment is very high. However, as profit-taking began, this surge was quickly reversed, and on September 4, the index contract fell to $1150, down 25.4% from its peak.

Speculation at Play, Fan Token Surge Stalls Before the European Championship

Fan tokens have generally risen in the past two months, with the most direct driving force being the anticipation of the World Cup. However, as the World Cup kicks off and the event concludes, fan tokens are likely to face a sharp decline as the excitement wanes, a "plot" that has precedent.

From June 12 to July 12, 2021, the European Championship, known as the "Little World Cup," kicked off, with various European powerhouses competing for the championship. Four months before the start of the European Championship, the "barometer" for football-themed tokens, CHZ, began to show unusual movements, rising from $0.02 to a peak of $0.9 in two months, an increase of 4400%. However, with less than two months to go before the European Championship, CHZ began a continuous decline from its peak, dropping to a low of $0.18 during the tournament, an 80% decrease from its previous high.

Looking at the overall trend of fan tokens this time, various football-themed crypto assets also began to "activate" four months before the World Cup, with significant increases in the past two months. However, based on historical trends, as the World Cup approaches, early speculative funds may sell off at high points to realize profits, posing a risk that many football-themed tokens may not "survive until the World Cup starts" and could plummet.

Analysts believe that the reason why football-themed tokens exhibit a pattern of surging before major football events and then plummeting afterward is primarily due to the fact that most users purchasing these assets are speculators rather than true football fans. They often do not hold these assets long-term, with speculation for profit being their sole purpose. Therefore, the speculation around football tokens is often difficult to sustain.

As a new wave of speculation in football-themed tokens rises, fans and investors should reflect on the value support behind these assets. Currently, CHZ and the club fan tokens issued on this platform, as mainstream football-themed assets, primarily derive their value from CHZ being the underlying blockchain infrastructure for these fan tokens and maintaining cooperative relationships with major clubs; various fan tokens serve as a medium granting fans the right to participate in club decision-making.

However, it is important to note that fans can only participate in club activities at a very superficial level through fan tokens, such as voting on the design of peripheral merchandise or obtaining some membership benefits. In the most critical areas of player and coach signings and strategic development, fan tokens cannot exert any influence. This means that the value of fan tokens is relatively limited; they are more like a means for fans to interact with their teams and do not truly impact the teams.

The Decision-Making Power Granted by Fan Tokens is Relatively Limited

In fact, the primary purpose of clubs issuing fan tokens is to generate revenue and increase interaction with fans. Data shows that the revenue of the top 20 earning clubs in Europe fell by 12% to €8.2 billion last year. To make up for the revenue loss, more and more clubs are issuing fan tokens, but from subsequent operations, it seems that most clubs have neglected to promote these tokens.

Oliver Bell, CEO of the Web3 project XCAD Network, has observed that the issue with fan tokens lies in clubs not actively promoting them or emphasizing their utility. "The people buying them are not necessarily fans of the club; most buyers are crypto enthusiasts."

With limited value support and a lack of genuine fan interest, speculators in the crypto space manipulate funds in and out of the fan token sector, creating the volatile price charts. As the 2022 World Cup approaches, users should be vigilant against the fan tokens that are being fervently speculated to avoid financial losses.