Cryptocurrencies have been a hot topic in the sports world since the emergence of fan tokens during the last World Cup. Blockchain provider Chiliz was credited with the concept of soccer fan tokens and some of these national team fan tokens saw incredibly impressive gains, reaching 500% or more. Now that the fervor of the tournament has died down, let’s take a look at the various club-level teams and their fan tokens, and explore the effect of a team’s performance on the associated cryptocurrency.
The platform Socios, powered by Chiliz, is the home of these fan tokens. Through the tokens, fans can vote on team decisions and receive VIP rewards. Chiliz has even launched a $50 million program to invest in new sports-themed Web3 projects. But the main question remains – are these fan tokens correlating highly with the CoinDesk Culture & Entertainment Sector (CNE), or are they simply a result of the team’s perpetual popularity?
We can start by examining the daily market capitalization performance of each token and comparing it to the CNE sector. After accounting for the supply values that have increased over time, we can see that the FTX collapse in November 2022 had a huge impact on the entire market. After adjusting for this sector effect, the performance of each token becomes much clearer. While Man City and PSG fan tokens have barely moved, Barcelona and Arsenal tokens have seen gains of 250% and 300%, respectively.
The explanation for this discrepancy is quite simple – Arsenal and Barcelona are on a comeback. Both teams have seen success in the past but haven’t won their respective leagues in quite some time. On the other hand, Man City and PSG have been dominant forces in the last few seasons and their fan tokens reflect that. This suggests that investing in fan tokens might be a way to bet on an underdog team’s success.
In conclusion, fan tokens may offer rewards and perks to dedicated fans, but they may also present the opportunity to speculate on the next rising star. If an unexpected team breaks out into the top of the league, those who had the foresight to invest in the associated fan token may be in for a pleasant surprise.
