With every football-related competition, the price of the Chiliz cryptocurrency seems to rise rapidly. On the occasion of the U7 World Cup 2020, the price increased by 18%. During the World Cup Qatar Event and the Tokyo 2020 Olympics, the price of the asset experienced respectively an increase of 90% and 41%. The question that arises is whether such an increase will be repeated during the 2022 World Cup in Qatar. To answer this, we need to understand what Chiliz (CHZ) is and the nature of this correlation.
What is Chiliz (CHZ)?
Chiliz (CHZ) is an ERC-20 token that runs on an Ethereum-based Chiliz blockchain. The token serves as currency for users who wish to purchase NFTs on the Socios platform. Indeed, the Socios site allows fans to purchase branded NFTs that connect them to their favorite teams and artists.
The website and mobile apps allow users to purchase NFTs, win them in contests, trade them with other users, and redeem them for team-branded benefits and merchandise. The site currently features branded NFTs for several sports and esports teams, with more on the way.
How to explain this correlation?
The Chiliz-Football correlation doesn’t seem rational. Unlike fundamental analysis, technical analysis finds its limits when it comes to stock market analysis. Indeed, an asset may seem correlated to external events, and the risk is then to connect between fictitious points. The other possible explanation for such a phenomenon relates to the irrationality of the markets. Thus, the investor makes decisions on the basis of his affects, and then rationalizes this choice.
During the year 2021, entrepreneur Elon Musk was criticized by the cryptosphere due to tweets with strong market impacts. Since his word was considered credible and legitimate, investors tended to follow his comments. Similarly, investors only need to believe in the correlation between sporting events and crypto chiliz for it to become a reality.
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