JAKARTA - The market for fan tokens and seasonal sports tokens is now heating up in Qatar's desert.
Interest in this particular type of cryptocurrency, usually associated with sports teams such as Barcelona or Brazil, has become a trend in the 2022 World Cup which starts on November 20.
According to Kaiko, a Paris-based crypto data company, the average daily trading volume for this token has increased to around US$300 million (Rp 4.7 trillion) in November from the previous US$32 million (Rp 501.5 billion) in October.
"So we have a huge 10-fold increase in volume for these tokens," said research analyst Dessislava Aubert.
For some buyers, this token offers an opportunity to engage with their side and gain benefits such as the opportunity to win a prize and vote on the song played in the game. For others, traded coins provide new investment opportunities.
They are brave investors who are trying to find a reasonable relationship between erratic coin prices and real-world events.
Argentine team token Lionel Messi slumped 25% to $5.26 following a surprise defeat to the team by Saudi Arabia, 1-2 in their first match of the 2022 World Cup. But it has fallen 22% again since Argentina's 2-0 win over Mexico brought relief to fans.
While his Portuguese coin Cristiano Ronaldo rose 119% to USD 7 in the 10 days leading up to the tournament but then began to lose almost half his value despite being unbeaten and at the top of Group H during the match against Uruguay on Monday, November 28. The 2-0 win saw Portugal reach the knockout-out round.
Likewise in club football, Arsenal tokens have fallen 12.5% since the start of the season to $1.68 even though they managed to climb to the top of the Premier League standings.
The widespread decline in the crypto market is partly the cause of price decline, according to researchers who say the unstable assets are wither because investors avoid risk.
The overall market capitalization for fan coins jumped to US$401 million (Rp 6.2 trillion) at the weekend of the opening of the World Cup, from US$256 million (Rp 4 trillion) about 10 the previous day, according to data from CoinGecko. But then it fell again below US$300 million (Rp 4.7 trillion).
Siddharth Jaiswal, founder and CEO of Sportzchain, which issued tokens for the Asian market, said people should not buy coins especially to make money.
The pain on the cake is the tool, available on the blockchain that can be easily traded in the future, so there is financial connotation attached to it, "said Jaiswal, quoted by Reuters.
"But the first perception should never be that you buy fan tokens from a profit-making point of view," added Jaiswal.
Socios, the token promoted by Messi, is the biggest player in the crypto industry. This token facilitates trading for most fan coins, which illustrates the purchase of tokens like joining this scheme of loyalty due to exclusive profits and rewards.
Several of the world's largest football clubs have launched tokens backed by Socios including Paris Saint-Germain, Manchester City, Inter Milan and Atletico Madrid, as well as the national teams Portugal and Argentina, with token markets ranging from around US$7 million to US$21 million.
Trading volume for Microsoftiz tokens connected to Socios, which users buy to trade with their team tokens, hit a seven-month high in early November ahead of the World Cup but has since fallen 40% from the peak price.
When looking at the details of Stockiz token trading with fiat currency, Korean won dominated with a total fiat volume exceeding 87% in early November followed by Turkish lira, according to data from Kaiko.
The surge in fan token growth comes at a time of chaos in the crypto market, which staggered with the collapse of major FTX exchange earlier this month. Bitcoin is now sluggish near their lows in two years to around $16,245.
While the failure of FTX has raised serious questions about the lack of regulation in digital assets, fan coins, which some publishers say are categorized as utility tokens, remain a gray area.
"Adequate tokens that do not offer adequate utility can face some regulatory scrutiny, as this will conclude that the token is an investment into the club," said Marcus Sotiriou, analyst at digital asset broker GlobalBlock.
"However, if the token offers exclusive benefits and focuses on the utility it provides to its fans, then in my opinion there will be no regulatory problems," said Sotiriou.
Socios said he believed in regulations to give fans trust and transparency.
In August, the British advertising watchdog made a decision against Arsenal over two ads about fan tokens posted on the club's website and Facebook deemed misleading and irresponsible, although the club denied it.
Markus Thielen, head of research at the digital asset of the Matrixport Platform, said interest in these tokens among football fans could be short-lived.
"Companies and teams selling these tokens must now offer more value periodically, otherwise users will lose interest after the World Cup ends quickly," Thielen said.
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