By
Steve Muchoki
December 19th, 2022
The overall market cap for fan tokens sporting players like Messi & Ronaldo jumped to $401 million at the World Cup’s opening weekend.
With the FIFA World Cup underway in Qatar, interest in fan tokens featuring sporting icons like Lionel Messi and Cristiano Ronaldo has taken center stage. The market for fan tokens featuring various players and teams has been rising since the World Cup began on November 20th. According to reports, the average trading volumes for these tokens surged almost tenfold to $300 million in November compared to $32 million the month before.
Different reasons spur the endless number of buyers lining up to purchase these tokens. For some buyers, these tokens offer the opportunity to engage with their favorite teams and gain additional perks from participating. For others, the tradeable tokens provide a savvy investment opportunity.
Erratic Link Between Messi, Ronaldo Team-linked Fan Tokens & Real-World Events
However, despite the perception that the tokens might chronicle real-life events at the World Cup, the reaction is not linear. For instance, the token linked to Messi’s Argentina slumped 25% to $5.26 after the South American favorites suffered a shocking defeat to Saudi Arabia. Nonetheless, the Argentine coin declined a further 22% following the team’s redemptive victory over Mexico in its second game. Although Argentina overcoming Mexico brought fan relief, it remains confusing that the corresponding tradeable coin devalued further.
Another instance of a broken link between fan tokens and teams is the coin representing Ronaldo’s Portugal side. The European team’s coin rallied 19% to $7, 10 days from when the World Cup was to begin. However, although team Portugal remains unbeaten in the tournament and recently clinched a spot in the knock-out stage, its tradeable coin is at almost half value.
Beyond the World Cup, in club football, Arsenal’s fan token is down 12.5% to $1.68 since the start of the season. This drop seems baffling because the North London side has had a remarkable run in the English Premier League. In fact, Arsenal sits atop the EPL standings going into the World Cup break.
Researchers opine that the broader crypto market slump is responsible for the price drops in fan tokens. This development is also due to investors shunning riskier assets in favor of more risk-averse ones.
Profit-making Should Not Be the Main Goal of Acquiring Fan Tokens, Stakeholder Says
Siddharth Jaiswal, founder and CEO of Asian market token issuer Sportzchain, recently proffered advice to digital token devotees. According to Jaiswal, people should refrain from buying Messi, Ronaldo, and other team-affiliated fan tokens primarily to make money. The “first perception should never be that you’re buying the fan token from a profit-generating standpoint,” he explained. Jaiswal further stated that the financial dimension of trading fan tokens serves as “the cherry on the cake.”
Fan tokens presumably belong to the utility token category, which remains a gray area regarding proposed crypto regulation. Further expounding on the perceived regulation dynamics of these tradeable coins, Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, noted that “tokens which do not offer sufficient utility could face some regulatory scrutiny because this would infer that the token is an investment into the club. However, if the token offers exclusive benefits and focuses on the utility it provides to its fans, then I do not think there will be regulatory issues.”
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