Despite the recent stagnation in the cryptocurrency markets, the notable increase in the price of Chiliz Blockchain’s cryptocurrency CHZ has captured the attention of crypto enthusiasts. Within just seven days, CHZ saw a 25% increase, reaching a two-month high by surpassing the $0.15 mark. This rise represents the third-largest gain among the top 100 cryptocurrencies by market value, even surpassing giants like Bitcoin and Ethereum.
Reasons Behind Chiliz (CHZ) Price Increase
One of the reasons behind this remarkable increase is the upcoming UEFA European Championship, scheduled from June 14 to July 14. CHZ is used on Socios.com, a platform that facilitates the creation of fan tokens for various sports teams, representing the interaction between fans and their favorite teams. The value of fan tokens reflects the enthusiasm and participation of sports fans, and these tokens are primarily acquired using CHZ.
The rise of CHZ reminds us of a similar situation before the 2022 FIFA World Cup. At that time, CHZ doubled its value just before the global sports event began, but experienced a nearly 40% drop in December of the same year. Analysts from 10X Research predict a similar scenario for the UEFA European Championship. They anticipate potential gains for CHZ until mid-June, but also warn of a possible sell-off wave after the event.
Price Trend of Sports-Focused Tokens
This situation once again confirms the “Buy the rumor, sell the news” phenomenon. The study titled “Expectation Gains and Event-Driven Losses in Blockchain-Based Fan Tokens: Evidence from the FIFA World Cup” shows that sports tokens tend to experience price increases before significant events and then see price drops once these events conclude.
Considering that football events stimulate consumption and economic activities across Europe, the broader impact of this effect on regional economies is also noteworthy.
With the approach of such major sports events, investors might explore the opportunities presented by the growing interest in sports tokens like CHZ. However, as past examples have shown, the sudden drops following these rises pose significant risks for investors. Therefore, investors need to be cautious and prepared for potential fluctuations.
