Crypto stocks, alongside many others, have been performing dismally for a while now. The crypto rally that took crypto assets to all-time highs in November last year tumbled in the turn of 2022. However, crypto firms maintain they will continue to sponsor sports teams.
While the existing contracts between crypto firms and sports teams will continue to exist in their original forms. Sport teams seeking the help of crypto firms to raise more money through sponsorships will have to wait. Companies dealing with crypto realize a direct impact on the stock price when crypto stocks stumble, as they have done for the better part of 2022.
Social investment community projects rely on stronger markets, at least from firms dealing with crypto. Whenever a dip in crypto stock happens, investors rush to sell their positions in the company and move to safer areas. The drastic move lowers the revenue-generating capacity of crypto firms.
How Have Crypto Firms Dominated The Sports?
Crypto-based companies and those dealing in blockchain have used sports to attract more audiences to their products. Worldwide, there are about 250 million soccer players and over a billion fans. The two groups represent a significant number of people who could take an interest in crypto products through daily trading or taking a long position in them, then cashing out.
Crypto.com is making big moves in the sports sponsorship arena, as it already has a deal to partner with FIFA. The company with at least 10 million users globally ushers a significant step previously held by other multinationals not dealing in crypto.
Previous contracts between crypto companies and sports brands have seen figures of about $1 billion going into sports. Deals by FTX, Coinbase, and Crypto.com dominate the figures.
Meanwhile, in Europe, eToro has made plenty of partnerships with teams from Serie A—Italy’s top football division. eToro’s entry into Serie A has worked for over eight teams so far. The whooping number is one of the largest by one company in a single league. In addition, the entry into Serie A has not stopped it from collaborating with Arsenal and a group of other teams in the Premier League—the most-watched soccer league in the world. German, Danish, and Monaco-based teams have also teamed with the company for sponsorship deals.
Why Do Falling Stocks Threaten Crypto Related Sponsorships?
Before the beginning of the massive crypto fall, the crypto market had a capitalization of over $1 trillion. The colossal sum has a strong hold on many economies and the technologies that support it. In the event of a slight fall, many companies lose a lot of assets.
Many crypto and trading companies exist on the continuation of crypto stocks performing well. The massive retreat for crypto stocks has led to some undesirable actions in some crypto exchange firms. Companies like Celsius paused some of their operations to lock out massive liquidation attempts by big investors who wanted to rush into safer places to store their money.
Why ECB Tightening Helps Crypto Firms Maintain Their Contracts
Volatility is the principal driver pushing people away from crypto stocks. The massive rush to sell any crypto assets is a dampener for the flourishing crypto industry that existed before the rise in inflation. Central banks in the US, UK, and many other places have made moves to help lower inflation. However, because of the conflicting situation in the European Union in the way individual economies run, the European Central Bank (ECB) has delayed raising interest rates.
The move by the ECB to take action in July will pile pressure on more economies to do the same, stumping out inflation and helping crypto firms maintain their sponsorship deals with sports clubs.
What Next For Sports Sponsorship by Crypto Firms?
Crypto firms have committed to pursuing their partnership deals even during the most trying moments for crypto assets in the markets. The duration of the momentum by the firms might benefit from the fact that crypto stocks have always rebounded. While plans to sponsor other teams might be in disarray in the crypto winter, a rebound will reverse the situation.