How can crypto investors capture the economic effects during the World Cup feast?

Written by: FCC

On November 22, it was a sleepless night for many football fans. On this day of the World Cup group stage, the superstar Messi's Argentina national team lost to Saudi Arabia with a score of 1:2. After Argentina's defeat, fans found it hard to accept the outcome, and there was a wave of criticism online, as this was indeed too shocking given the historical strength of both teams…

There have been numerous bizarre events during this World Cup.

On November 20, the highly anticipated 22nd Qatar World Cup officially kicked off. As the second Asian country to host the World Cup in history, Qatar has made significant financial investments; according to relevant media reports, Qatar has invested nearly 220 billion USD in infrastructure, venues, cultural arrangements, and other aspects related to the World Cup.

If you have no concept of 220 billion USD, you just need to know that this figure has surpassed the total market value of the second-largest cryptocurrency, ETH. Even more dramatically, rumors circulated before the opening match that "Qatar, in order to save face, spent 7 million to bribe opponents, determined to maintain the host's position in the opening match."

The reason Qatar's national team was able to qualify for the World Cup was merely due to the privilege of being the host, as their team strength is still far from that of other teams. As a wealthy oil nation, it seems reasonable for Qatar to spend 7 million to maintain national dignity.

However, despite this, in the opening match of the World Cup, Ecuador, known as the "highland killer" of South America, still defeated the host Qatar with a score of 2-0. The heavy financial investment before the match did not seem to lead to an extraordinary performance from the Qatari team.

In the past 21 World Cup opening matches, host teams have never lost. Even the weakest South Africa managed to draw 1-1 with Mexico; Qatar became the first host in history to lose in the opening match, successfully breaking the curse of host teams not losing their first match in World Cup history.

However, Qatar was not the only one to suffer defeat in this match. Due to the rumors of heavy financial bribes to opponents before the match, many insiders also made incorrect predictions on various World Cup betting platforms, suffering significant losses.

But betting on the wrong team was not the worst outcome; the worst was for those crypto investors heavily invested in fan tokens. In this World Cup, along with the breaking of the host's first match undefeated curse, the tradition of related concept tokens rising during the World Cup was also shattered.

On November 1, the leading sports concept fan token CHZ reached a peak price of about 0.296 USD on Binance. According to past trends, once the World Cup month officially begins, related concept fan tokens usually experience a surge. However, this year's market was unexpectedly disappointing. As of November 22 at 12:40 PM, the current price of CHZ on Binance was 0.176 USD.

This is a very alarming signal. Compared to the price at the beginning of this month, CHZ has seen a 40% decline in the past twenty-two days, nearly halving in value!

Affected by the decline in CHZ's price, related fan tokens have also experienced varying degrees of decline this month. Even the highly anticipated NFT jointly issued by Cristiano Ronaldo and Binance did not perform as explosively as the market expected.

This World Cup year, the wealth creation effect seems to have failed.

Is the World Cup economy collapsing?

Objectively speaking, this World Cup is still a peak event of global celebration, marking the final showdown between superstars Cristiano Ronaldo and Messi, as well as a battle that represents the twilight of countless fans' youth.

Players sweat it out on the field, and fans cheer wildly in front of their TVs; the passion for the World Cup is still alive. However, for the crypto industry, the wealth creation effect of the World Cup seems to have failed. Up to today, the excitement of the World Cup has not brought effective economic effects to the crypto world.

Rationally, the cooling of the crypto market cannot be blamed on the collapse of the World Cup economy. The main reason this World Cup has not brought signs of recovery to the crypto market lies in the global economic recession caused by the COVID-19 pandemic.

Since the end of 2019, the pandemic has severely impacted the stability and development of global financial markets for three years. Since the outbreak of COVID-19, the debt levels of citizens in various countries, overdue debts, and unemployment rates among the working-age population have all risen significantly.

Finance is often a domino effect; in a sluggish macro market, the World Cup market also struggles to take the lead. Of course, it is precisely due to the poor performance of the global economy in recent years that the crypto market has high hopes for this World Cup.

Even before the World Cup began, many leading institutions in the industry had started to focus on this sector. On June 23, 2022, Binance announced a long-term exclusive NFT partnership with Portuguese football legend Cristiano Ronaldo. During the collaboration, Binance and Ronaldo will create a series of NFT collectibles and exclusively sell them on the Binance NFT platform.

Many may not realize how strong the earning power of top sports stars is. According to the latest data from Transfermarkt, Ronaldo's current market value is 35 million euros, ranking first among players over 37 years old. In this collaboration, Binance has almost acquired all of Ronaldo's personal rights in the Web3 space. Although Binance has not disclosed the signing price with Ronaldo, it is undoubtedly a valuable contract.

In addition to Binance, another leading exchange, OKX, has also made significant investments in the World Cup, launching NFT products for the 32 participating national teams just before the tournament and spending millions of dollars to create a prize pool for the World Cup NFT series.

This shows that the crypto market has invested considerable time and economic costs in anticipation of the World Cup's booming market. Therefore, it can be inferred that although the macroeconomic market has a profound and significant impact on the crypto market, it cannot completely crush the expected World Cup market; especially with the support of leading institutions like Binance and OKX, the quadrennial World Cup will still bring a wave of excitement and market activity to the crypto market.

What does the future hold?

Undoubtedly, with the backing of institutions like Binance and OKX, along with their strong fan bases, the World Cup economy is unlikely to collapse entirely, and the World Cup market in the crypto space will not simply disappear; it will still come, but not now.

We all know that the incident where CZ targeted FTX at the beginning of this month has led to several crashes in cryptocurrency prices, involving many platforms, projects, institutions, and users, creating a chilling effect in the market. Currently, the aftershocks from the FTX collapse are still ongoing, and the industry is in a waiting period before recovery. During this time, even the World Cup is unlikely to drive market activity.

Thus, we can infer that the World Cup market and its hotspots still exist, but they will not arrive as early as we expect. The economic effects of this year's World Cup will likely be delayed.

The author believes that after the group stage ends and the top sixteen teams are officially announced, the World Cup-related projects will begin to show a certain upward trend. The later the matches progress, the greater the economic effects brought by the World Cup will be. In this wave of excitement, in addition to the products related to teams approaching the championship, tokens with strong inherent strength and national backing will also see significant increases.

According to various sources, the favorites to win this year's World Cup include Argentina, where Messi plays, Brazil, where Neymar plays, Portugal, where Ronaldo plays, and France, the reigning champions from the last World Cup. It is believed that as the World Cup progresses to the Round of 16, Quarterfinals, and even Semifinals, the related fan tokens of these popular teams will also experience corresponding increases.

Additionally, the Web3 football metaverse FFC (full name: League of France Football Club), recently launched by teams in the Ligue 1, also has certain conditions for growth.

Although FFC is not issued by popular national teams but rather jointly launched by teams in Ligue 1, it has a natural advantage in fan base size, as there are 20 teams in Ligue 1, making its total fan base far larger than any single national team on the market. Thus, FFC has a stronger potential for long-term development.

More importantly, compared to national team fan tokens like BFT and ARG, which have been launched for several years and have gone through multiple rounds of increases, FFC, as a newly launched football ecosystem this year, has a lower participation threshold for users and more opportunities for price increases.

In summary, as the World Cup matches enter a heated phase, the economic effects of the World Cup will also follow. However, as investors in the crypto industry, no one can predict the market with absolute certainty. For us, learning how to filter out projects with long-term development potential from the vast sea of cryptocurrencies remains a necessary lesson.