• Wed. Jun 22nd, 2022

Cryptocrash: Are sports sponsorships in danger after the loss of value of cryptocurrencies?

ByHazel R. Lang

May 17, 2022

This year’s cryptocurrency crash threatens to end the burgeoning investment opportunity. Worth around $1 trillion last November, the Bitcoin market leader has been brought down to earth and now holds around half that value. Another important piece, moon earth, was eliminated after its value fell from $40 billion to $300 million, a fall of more than 99%, prompting investors to seek suicide prevention hotlines.

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There are real issues that have plagued the cryptocurrency market. This could cast doubt on many investments that many cryptocurrency companies have made in sports.

Back in June 2021, Formula 1 announced a partnership with crypto.com as the official cryptocurrency sponsor of the sport. May 2022 saw the inaugural Miami Grand Prix, also sponsored by crypto.com. Since the inception of the partnership, the price of a crypto.com coin has dropped from $0.75 to $0.20, a drop of 73 percent. Are these investments safe and sustainable in such a market?

These collapses in value are a warning to put your investments in the same basket. Although with regulation on the horizon, there could be opportunities to avoid the worst of perils.

Businesses are already facing lawsuits over missing payments

Many sports and sports teams have been interested in the crypto space for some time. Marketing divisions are always looking for new ways to build a brand, and cryptocurrency seems like the next step for these brands to advance in the digital world. Like any investment, there are risks. Are those for cryptocurrency too big?

A cryptocurrency, IQONIQis already facing the end of operations after its tokens became worthless upon entering liquidation. The temperature from the United Kingdom have reported that the Spanish football team Real Sociedad owe $850,000 as well as the English Premier League side crystal palace take legal action against the company. IQONIQ was the Eagles shirt sponsor.

The inherent volatility of the crypto space makes forward planning difficult and the recent, but sustained, decline in fortunes could be sobering. One of the supposed advantages of the market is its deregulation, giving coin companies a lot of freedom. However, this leaves consumers at risk as the teams they support announce products that could put fans at risk.

In response to the collapse of TerraUSDUS Treasury Secretary Janet Yellen said there should be more regulation of the crypto space.

“It just illustrates that this is a rapidly growing product and that there are risks to financial stability and we need an appropriate framework,” she says.

A UK Treasury report last month also outlined plans to regulate cryptocurrency, which it said would become a “prevalent means of payment.” While this bodes well for the long-term future of sports-cryptocurrency investment ties, fans must be protected by the teams they trust. Future regulations may provide this.


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