Fan tokens incorporate digital scarcity into their monetary policy. The companies that issue the fan tokens have achieved essential business alliances. In this article, we will show you the Six factors that will drive the price of fan tokens in 2022.
Between November 21 and December 18, 2022, football lovers will be watching the World Cup held in Qatar.
Everything indicates that not only the mood of the fans will be convulsed during the competition and its previous instances, but the price of specific crypto assets: the fan tokens.
These Fan Tokens are named after sports teams to let their holders participate in incentives, surveys and even be considered in some clubs or selected choices.
So far, progress in the development of Fan Tokens has been significant, butthere has not been a rampant ‘rush’ to acquire these coins.
When it comes to sports team Tokens, there has been no riot comparable to the ICO mania of 2017, or the FOMO of 2020 DeFi; or the explosion of NFTs and blockchain games of 2021… until now.
Argentine specialist in personal finance Federico Tessore, founder of the educational company Inversor Global,thinksthe following concerning fan tokens:
(…) Thanks to cryptocurrencies, a new dimension has been opened so that millions of soccer fans can enjoy an augmented experience like never before in the history of sport”.
Federico Tessore, founder of Inversor Global
These assets are freely traded as if they were cryptocurrencies. By acquiring them, fans can participate in the success of their soccer team.
Fan tokens allow their holders to participate in sweepstakes, rewards, and surveys—source: Socios.com.
2022 could be the year that makes a difference.
A “fantastic mania” seems to be imminent and, if that scenario occurs,the Fan Token price of these crypto-assets will go to values not yet seen.
FOMO means “Fear of Missing Out,” a key factor to consider when swing trading bitcoin or other cryptocurrencies because it is still primarily driven by emotions rather than valuation.
This expression “describes a state of mind among cryptocurrency investors when one of them is rising in price. Investors start buying for fear of missing out on potential profits. ‘
It would not be uncommon for FOMO to hit the fan token industry next year, just as it did with ICOs and DeFi in the past, or the NFTs, play-to-earn, and metaverses of late 2021.
Here are six reasons this could happen; however, thisarticle does not constitute an investment recommendation. Each reader is encouraged to do their research on the matter to reach their conclusions.
Qatar 2022: the catalyst for Fantokenmania
A catalyst is a compound that increases the speed of a chemical reaction.
In the same way,the imminence of the Qatar 2022 World Cup, with its previous qualifying stages, could be the factor that, in a few months, catalyzes the FOMO concerning the fan tokens of national teams.
Thatwhat happens in the world of football affects the price of these fan tokens is a fact.
It was demonstrated by incorporating the player Lionel Messi into the French club Paris Saint Germain squad.
The price of this club’s fan token,PSG, shot up with rumors of the arrival of the Argentine footballer. On August 9, the price of PSG increased by 130% in 6 days.
Cryptocurrencyand token price trackerCoingeckoshows that itreached as high as $ 56.19 before declining. When writing this article (November 2021), each PSG is trading at USD 21.15.
One of the maxims of financial investments says that past returns do not guarantee future returns.
In any case, it is not unreasonable to believe that the pricing of fan tokens for some of the 32 teams competing in the Qatar 2022 World Cup will be associated with the team’s actions and success in the tournament.
Some national soccer teams already have fan tokens: Argentina, Brazil, Uruguay, and Spain. The first issued their fan tokens in alliance with the Socios.com platform, while the other three countries did so with the Bitci company.
Although, so far, there are few fan tokens selected, the leaders of the companies in this industry areconvincedthat thebusiness will continue in a necessary expansion.
“The future of sports industry revenue growth will be driven by digital asset and revenue ecosystems. New models need to be invented. Not to compete but to complete existing offers. Clubs cannot reach 100% of their audience, ever, so they need new products.
Alexandre Dreyfus, CEO of Socios.com y Chiliz.
Fan tokens are scarce assets.
As with bitcoin and other crypto assets,fan tokens have a predefined maximum issue.
In the case of Socios.com tokens, the maximum number of units in each fan token is20 million.
In the case of Bitci tokens, the maximum issuance is higher,100 million, but it is also limited to that amount. Both companieshave introduced the concept of digital scarcity into these products.
According to theBillin accounting glossary, “the law of supply and demand is an economic principle by which the price of a good is set when the quantity supplied is equal to the quantity demanded.”
As a consequence of this law,an increase in demand will cause a rise in prices.
If, as a result of marketing, the proximity of the World Cup, or simply the desire to have a digital asset that bears the name of the favorite country or team,the demand for this product increases, its price should also rise.
It is due to the impossibility of increasing the offer, that is, of issuing new tokens.
The economist Milton Friedman, the winner of the Nobel Prize in 1976, said that “inflation is everywhere and at all times a monetary phenomenon.”
His theories show that the increase in the money supply leads to a devaluation of the currency applied to fan tokens.
It is seen thatdevaluation by issuance is not possible due to the predefined supplythat gives them deflationary properties.
The CEO of Socios.com and Chilizisaware of the value of scarcity.
“Everything in sports is about scarcity: a limited number of tickets, a limited number of uniforms, et cetera. If there is scarcity and there is demand, then there is value. And if there is value, there is a market. So we created a market where you and I can buy these fan tokens.
You can buy them, and you can sell them, you can hold them, you can do whatever you want. That is not the primary goal of the fan tokens, but it is something that is there. In the same way, there are ticket sales, but there is also a massive secondary market.
Alexandre Dreyfus, CEO of Socios.com y Chiliz.
Alliances with significant world sports companies
The success or failure of these sports fan tokens depends, to a large extent, on thecorporate decisions and business alliancesmade by their issuing companies.
Neither Socios.com nor Bitci are public companies, so they do not have an obligation to show their commercial balance.
Since your business needs to be so, what is public are the alliances with other companies and entities.
In the case of Socios.com, they have established links to launch tokenswith more than 50 sports entities.
They are soccer teams, e-sports, Formula 1 teams, NBA teams, the UFC, and a cricket team.
AC Milan, the Argentine Soccer Team, the Independent Athletic Club, AC Milan, FC Barcelona, Paris Saint-Germain, Chicago Bulls, Aston Martin, and Houston Rockets are justsome of the fan tokens already issued by Socios.com.
The Argentine soccer 1st division championship is called “Torneo Socios.com.” Source: Youtube.
Bitci’s alliances, meanwhile,are with 20 sports teams and companies, including MotoGP, McLaren, Deportivo Alavés, and the soccer teams of Uruguay, Spain, and Brazil.
It’s worth noting that Bitci does not focus exclusively on the fan token businessbut also manages a BTC and cryptocurrency exchange.
According toCoinMarketCap, it’s market volume in the last 24 hours was USD 2.8 million, considerably less than the USD 28 billion of Binance, leading to ranking according to this parameter.
Socios.com is leading the way so far, but as has been seen, the alliances achieved by Bitci with large companies and teams are not negligible.
Fan Tokens waiting to be listed on large exchanges
Fantokenmania has yet to explode.
To buy or sell most of the Fan Tokens, it is necessary toenter Socios.com, Bitci, or the Chiliz exchangeplatforms.
Some exceptions are PSG fan tokens, Juventus fan tokens, and, more recently, the Porto Token, which can be acquired on the Binance platform.
And large exchanges such as Binance, Huobi, OKex, Coinbase, among others, have not incorporated these assets on a large scale yet.
The value of these assets might rise if they are listed on the world’s top exchanges, as has happened with various cryptocurrencies.
This media reported, for example, the notable price increase that the Shiba Inu token had in a few hours after being added to Binance last May.
Fan tokens: an industry with potential not yet massively exploited
As shownby Google’s analytical metrics, the interest in fan tokens, although it is increasing, is not yet massive.
Thesearch term “fan token”lags far behind when compared to other related terms such as “NFT,” “cryptocurrencies,” “DeFi,” or “Axie Infinity.”
The country in the world with the most searches on Google for the term “fan token” in the last seven days is theRepublic of Benin,formerly known asDahomey, a country inWest Africa., followed by Burkina Faso, Togo, Turkey, and Lebanon.
In Spanish-speaking countries, Spain stands out, followed by Venezuela, Argentina, and Chile.
According to theAnswer The Publicwebsite, amongthe most frequent questions that Google users ask about fan tokensare:
“what are Fan Tokens,” “how to buy Fan Tokens,” “how to sell Fan Tokens,” “how Fan Tokens work,” and “which Fan Token to buy.”
People wonder what fan tokens are, how they are bought, how they are sold, and how they work. Source: Answer the Public.
As you can see, the issue is not yet a trend, and ignorance is still a lot. Being an early adopter of fan tokenscould report considerable profitsif and only if the market considers that these assets should be worth much more than they are currently worth.
At the time of writing, the fan token of the Argentine National Team is trading forUSD 2.27, almost 20 times below the maximum price reached by the Paris Saint-Germain token.
Considering that the maximum supply is the same (20 million tokens), reaching a similar price would not be impossible or unthinkable. However, there is no certainty that it will happen.
The cryptocurrency market would continue to rise in 2022
The last reason that is presented in this text about why 2022 would be the year of the Fantastic Mania is that the cryptocurrencymarket, in general, could continue to riseat least during the first months of the year.
It has been predicted by several analysts when studying on-chain metrics and making comparisons with previous bullish cycles.
“Bitcoin at $ 500k is possible in the next 9 months,”Carl “The Moon” Runefeltrecently stated. It would be approximately May or June 2022.
Also, the Argentine lawyerCarlos Maslatónis optimistic about the price of BTC. He estimates that the crypto asset will exceed $ 300,000 by July of next year.
AnalystWilly Woo, whose reports are frequently reviewed by this outlet, sees that BTC could hit $ 300,000 in this bull cycle that, for him, has not ended.
The difference with the other specialists reviewed here is that Woo believes this will occur in early 2022.
And what does all this have to do with fan tokens? Thatif cryptocurrencies were a soccer team, bitcoin would be their captain.
The market tends to follow the price of BTC, be it lower or higher. Few crypto assets manage to decouple from BTC in terms of their worth, and, in general, they do so only momentarily to follow the majority trend.
Will fan tokens be a bubble? Probably yes
Before you rush out to buy fan tokens (which you shouldn’t do to read this article since, as clarified, it does not constitute an investment recommendation), itis necessary to consider the risks involved.
Keep in mind that these assets are highly dependent on their issuing companies; they are not decentralized.
Also, as we have seen, the catalyst driving its price would be the Qatar 2022 World Cup. What would happen if this sporting event was suspended or postponed, as with the last Olympic Games?
Also, the Soccer World Cup this time will be held at the end of 2022, and not in the middle of the year, as it usually happens.
It would not be unusual for the price of cryptocurrencies to repeat the same pattern as in previous cycles and suffer a significant correction after reaching new all-time highs in the first months of the year.
If this lasted for months,we could be talking about a new “crypto winter” like the one experienced in 2018.
If such a scenario occurs, the fan tokens will likelyfollow the general market trend, and their price will decrease considerably.
In addition to these risks, it is necessary to considerthe usual behavior of cryptocurrency fads.
The market has already seen numerous bubbles. Mentioned in this article were ICOs, DeFi, and governance tokens whose “farming” was all the rage in the “DeFi Summer” of 2020.
In all these examples, we’ve seen that the fall was inevitable after reaching all-time high prices.
Financial bubbles tend to consistently repeat the same pattern—source: adapted from link.springer.com.
It is possibly the same as the case with fan tokens.
Therefore, if you want to speculate financially with these assets, itis essential to know the market cycles to anticipate and evaluate the best conditions to open and close positions.
To achieve this, by investing in fan tokens, increasing equity – measured in fiat money or a hard currency such as bitcoin- can be beneficial to gain some knowledge about trading.
Tools such as fundamental analysis, the technical analysis, and management of risk will be essential, both to keep out the investment opportunity as not to be the last to leave, after Let the Fantokenmania say:
“Enough, this is where I have come.”
