With the World Cup approaching, football concept coins have set off a frenzy of speculation

The quadrennial World Cup will open on November 21 this year, when fans from all over the world will flock to Qatar to witness this global sports event. Whenever the World Cup comes, the football-related industries will usher in a wave of explosions, and the fan tokens that have emerged in recent years have also set off a wave of hype before the opening of the World Cup.

In the past two months, football-themed crypto assets represented by Chiliz (CHZ) have risen against the trend in the bear market. CHZ has risen from $0.1 to $0.25, an increase of 240%. Fan tokens of various teams issued based on the Chiliz blockchain have also risen. Fan tokens of top clubs such as Paris Saint-Germain, Juventus, and Barcelona have all risen by about 50% recently, and the Portuguese national team's fan token has risen by more than 700%.

Behind the frenzy of hype lies the risk of a sharp drop. The "plot" of fan tokens soaring and then plummeting before the start of major events has already been staged. Before the start of last year's European Cup, the fan tokens also started to rise four months before the start of the game, but they entered a downward trend before the start of the game, with the highest drop from the high point reaching 80%.

At present, the main value support of fan tokens lies in the fact that fans can use such assets to participate in some decisions of the club. However, it should be noted that the rights of fans are limited to voting on the design of team peripheral products and obtaining some membership benefits, and cannot influence the signing and actual operation of the team, which reduces its upper limit of value. In addition, many clubs did not vigorously promote fan tokens after issuing them, and the degree of penetration into the fan group was also limited.

Some crypto practitioners have observed that the people who buy fan tokens are not necessarily fans of the club, and most of the buyers are crypto enthusiasts. Since most crypto people speculate on football concept tokens for the purpose of speculative profit, it is not surprising that such assets show a trend of skyrocketing and plummeting.

As the World Cup approaches, fan tokens are generally rising

In anticipation of the World Cup, Chiliz (CHZ) has become the most watched football-themed blockchain project in the market recently, and is also the market leader in this concept. According to Coingecko data on September 4, CHZ's circulating market value exceeded US$1.14 billion, ranking 50th in the crypto asset market value ranking.

Chiliz itself is a blockchain financial technology provider for sports and entertainment, and is the basic blockchain platform for many football clubs to issue fan tokens. Based on this underlying blockchain platform, Chiliz launched an application dedicated to sports fans, Socios.com. On Socios.com, fans can buy CHZ and exchange it for fan tokens of a club, and then vote on club affairs, and even directly participate in management or communicate with players.

At present, Chiliz has reached cooperation with many top football clubs such as Manchester City, Arsenal, Barcelona, ​​Atletico Madrid, Juventus, Roma, AC Milan, Inter Milan, Paris Saint-Germain, etc., and has issued fan tokens corresponding to each team. Last year, the platform also reached a cooperation with the Portuguese national team, expanding its business scope from the club to the national team level.

Chiliz empowers fans to interact with clubs and participate in management affairs through fan tokens, providing solutions for major teams to expand fan economy and shortening the distance between fans and teams. Before the start of the 2022 World Cup, CHZ was unsurprisingly sought after by investors.

CoinGecko data shows that since the end of July, the CHZ token has risen against the trend in the crypto asset bear market, rising from $0.1 to $0.25, a 2.5-fold increase in less than a month. As of September 4, CHZ has retreated from its recent high and is quoted at $0.21.

In addition to CHZ, the fan tokens of major clubs issued based on Chiliz have also risen. In the past two months, the fan token PSG of Paris Saint-Germain Club has increased by 48%, the fan token JUV of Juventus has increased by more than 50%, and the fan token BAR of Barcelona has increased by more than 65%. And because the World Cup is a competition between national teams, the fan token POR of the Portuguese national team has increased even more dramatically, from $0.6 to $5.05 in two months, an increase of 741%.

Fan tokens have generally risen recently

With the general rise of football concept tokens, the crypto asset trading platform Binance has recently launched a football fan token index perpetual contract. According to the announcement, the price index will track the market performance of football club fan tokens listed on the Binance spot market.

In fact, this index also provides the market with a new type of football concept speculation target. The Binance market page shows that the index rose from $1,008 to a maximum of $1,541 on September 1, the day it went online, with a short-term increase of 52.8%, indicating that the market speculation sentiment is very high. However, as profit-taking began to sell, this round of gains was quickly filled. On September 4, the index contract fell to $1,150, a drop of 25.4% from the high point.

Due to hype, the rise of FanCoin stopped before the European Cup

Fan tokens have generally risen in the past two months, with the most direct impetus coming from the anticipation of the start of the World Cup. As the World Cup opens and the tournament ends, fan tokens are likely to plummet as the popularity of the tournament wanes. There are precedents for such a "plot."

From June 12 to July 12, 2021, the European Cup, known as the "Little World Cup", opened, and various European powerful national teams participated in the championship competition. Four months before the start of the European Cup, CHZ, the "barometer" of football concept tokens, began to move abnormally, rising from $0.02 to a maximum of $0.9 in two months, an increase of 4400%. However, less than two months before the start of the European Cup, CHZ began to fall continuously from its high point. During the European Cup, CHZ fell to a low of $0.18, a drop of 80% from its previous high.

Looking at the overall trend of this round of fan tokens, various football concept crypto assets also started to "start" 4 months before the World Cup, and have seen relatively high growth in the past two months. However, combined with historical trends, as the World Cup approaches, funds that participated in speculation early may sell at high points to realize profits, and a number of football concept tokens are at risk of plummeting before the World Cup starts.

Analysts believe that the reason why football concept tokens show a pattern of first soaring and then plummeting before and after major football events is mainly because most of the users who participate in purchasing such assets are speculative rather than real football fans. They tend not to hold these assets for a long time, and the only purpose is to speculate and make profits. Therefore, the speculation of football tokens is often difficult to sustain.

As a new round of speculation on football concept tokens emerges, football fans and investors should think more about the value support behind such assets. At present, CHZ and the club fan tokens issued on the platform are mainstream football concept assets. The value of their existence lies mainly in the fact that CHZ is the underlying blockchain infrastructure for the issuance of these fan tokens and maintains a cooperative relationship with major clubs; various fan tokens serve as a medium to give fans the right to participate in club decision-making.

However, it should be noted that fans can only participate in club activities at some subtle levels with the help of fan tokens, such as voting on the design of team peripheral products and obtaining some membership benefits. Fan tokens cannot play a role in the most critical aspects of the club's selection of players and coaches and the formulation of development strategies. This means that the value of fan tokens is relatively limited. It is more like a means for fans to interact with the team and cannot really influence the team.

Fan tokens give fans relatively limited decision-making power

In fact, the main purpose of major clubs issuing fan tokens is to generate revenue and increase ways to interact with fans. According to statistics, the sales of the top 20 revenue-generating clubs in Europe fell by 12% to 8.2 billion euros last year. In order to make up for the loss of revenue, more and more clubs are issuing fan tokens, but from the subsequent operations, most clubs seem to have neglected the promotion of these tokens.

Oliver Bell, CEO of Web3 project XCAD Network, observed that the problem with fan tokens is that clubs do not actively promote them or emphasize the utility of the tokens. “The people who buy them are not necessarily fans of the club at all. Most of the buyers are crypto enthusiasts.”

With limited value support and real fans not buying, speculators in the crypto space manipulated funds to quickly enter and exit the fan token sector, which also outlined the K-line chart of skyrocketing and plummeting. As the 2022 World Cup approaches, users should be vigilant about fan tokens that are being hyped to prevent financial losses.