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Arsenal has a sporting currency and so does PSG – within the crazy US$3 billion market, where prices rise for no reason – DL News
- Coin holders Paris Saint-Germain had a wild ride this week in Champions League action.
- Victories on the field do not mean gains in the market.
- The Argentine national team token behaved strangely after the World Cup triumph.
As fans filled a Paris stadium on Tuesday night to watch a match between football clubs Paris Saint-Germain and Borussia Dortmund, traders also hoarded PSG sports coins.
Excitement was building as PSG’s superstar striker Kylian Mbappé looked for a goal to take his club to the Champions League final on June 1.
At 26 minutes into the match, traders had increased bids for the PSG digital token by 4%.
Dortmund’s Mats Hummels then headed the only goal of the game for the victory and the token sank more than 18%, according to CoinGecko.
Wild ride
The token’s rollercoaster ride may have been wild, but it made sense – losses on the ground should translate into declines in the market.
And yet, in Spain, holders of Sevilla FC’s sports coin are up 14% on Wednesday, and while they celebrate their good fortune, they are also scratching their heads.
Sevilla did not have crucial games, nor did they make major negotiations or important coaching hires. In 12th place in La Liga, with two games left in the season, there wasn’t much to celebrate.
So why are Sevilla sports currency flying high?
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Nobody knows.
Welcome to the weird and wild world of sports coins, which blur the line between fan engagement, sports gambling and pure crypto speculation.
Stocked with dozens of coins, this corner of crypto is worth around US$3 billion in market value.
Many famous professional sports teams feature their own tokens – FC Barcelona, Manchester City and Arsenal FC all have tickers – as do the national football teams of Spain, Brazil and Argentina.
While the tokens demonstrate cross-pollination between global brands and cryptocurrencies, what really sets the offerings apart is their completely unpredictable behavior.
When Lionel Messi led Argentina to World Cup victory over France in December 2022, one would have expected the team’s token, ARG, to soar.
You’d be wrong – actually fell more than 3% on game day, according to data from CoinGecko. And it ended up losing three quarters of its value by the end of the year.
“Potential price fluctuations, up and down, could be greater and depend more on the market and not just sporting events.”
– Game creator
Unlike conventional sports betting, several factors that have nothing to do with game results affect sports coin valuations.
“Potential price swings, up and down, could be larger and depend more on the market and not just sporting events,” said Playmaker, a pseudonymous sports coin trader. DL News.
By far the biggest sporting currency is that of PSG, which is worth more than US$47 million.
Unsurprisingly, these offerings are often compared to memecoins, which drives Alexander Dreyfus crazy.
It’s not a memecoin!
He is the CEO of Chiliz, a French crypto company and leading issuer of sports coins.
“It would be a huge insult to the six years of work developing the token’s utility,” he said DL News in a recent interview.
Utility? Well, actually, these coins have a function: they allow holders to vote on their club’s shirt designs, the music played when players take the field for matches, and even the Game Personality.
Voting Tokens
Chiliz developed an app called Socios to manage voting. And the clubs that sign must adhere to the results – it is written in their contracts.
Chiliz launched sports coins in 2018 as a new way to connect fans and teams.
Christian Ott, founder of analytics platform Rocketfan, which tracks sports currencies across the market, said he has participated in hundreds of such surveys through the app.
Sports coins purchased on centralized exchanges like Binance rather than through the app do not have the same voting capabilities.
“If you’re buying on an exchange, you’re probably buying to speculate,” he said.
Ott explained that searches vary between categories. Some polls ask fans to vote on the club’s social media posts or awards given to players.
Ott’s favorites are the in-game polls. “You can watch TV and see the decision you made on the app,” he said.
This did not exclude him from speculating on these currencies.
Alongside voting on club results, he explained how he implements an indexing strategy – a way of minimizing risk by trading a basket of assets – to play in sports currencies.
“My strategy for the last two years has been to just have all fan tokens,” he said DL News.
“I have a small amount of each fan token, and if one of them moves in a way that I think is not sustainable in the long term, I allocate it to other fan tokens.”
This strategy helps balance random spikes in token prices.
The Italian club Lazio’s token, for example, fell more than 7% on Wednesday. Their last match was five days ago and the team has no matches until this weekend.
Ott said larger sports coins are more impacted by results than smaller ones, which have less liquidity.
Possible explanations
Just like Ott’s analytics platform, Playmaker has built an audience on X, doling out possible explanations for sports currency movements.
The large-scale crypto market is at the top of the list.
“The price of Bitcoin could drop drastically just before or during the match or event,” said Playmaker, who started trading sports currencies in 2021. DL News.
However, when PSG lost to Dortmund in the first leg of the Champions League on May 1, he tweeted that the sports currency fell 15%.
“This time [it was] due to sporting events.” he said.
Liam Kelly is DL News’ Berlin correspondent. Contact him at liam@dlnews.com.