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Intro Notes, Plugs & Amendments 🔌🔧

Thanks so much for returning to the Sporting Crypto newsletter!

In this week’s edition, I explore something in a slightly philosophical form rather than diving deep into a project or news story. I want to do more of these. Ideas that I have that are better explored on paper, and then discussed with peers!For me, the best and worst thing about this world is that it’s a blank canvas.

Why?Because we struggle to think outside of the constraints of what our existing systems are like, and sometimes think too far beyond them. I’ve been experimenting with toggling just a little bit to make me think about things differently. That little bit of nuance makes the difference between something crazy, and something really understandable.

 🔌 I was on the NFTFC podcast! Check it out:

This week’s deep dive: The Window of Volatility and the Valley of Liquidity

Today’s deep dive is a mini essay, of sorts.

It’s something I’ve been thinking about that made sense to explore on ‘paper’.

The window of volatility 

I want to start with this notion:

On the face of it, there's no doubt that this is true.

But let’s add context to this statement. 

The NASDAQ stock exchange is open from 9.30am - 4pm ET (Eastern Time) every weekday. That’s 6.5 hours a day, 5 days a week - meaning there is an opportunity to trade within that market, for 32.5 hours a week.

In crypto, we have a global market that is open 24/7 - aka 168 hours a week of trading opportunities.

So the window of ‘volatility possibility’ and therefore ‘volatility’ is five times smaller when trading the NASDAQ compared to crypto markets.

There are lots of nuances here, but that helps paint the picture.

An emerging technology market is going to be volatile. But it’s going to be especially volatile if its ‘window of volatility’ is 5 times larger.

NFTs are dead, right?!

I want to shift gears for a second and talk about NFTs.

In 2017 there was a headline at least once a month talking about the death of crypto.

Thi stuff gets clicks. And in a world where ad revenue rules newsrooms, guess what they’ll write about…yep, you’re right, whatever gets clicks.

Market cap is a decent indicator, but below you’ll see two charts - Volume & Holders.

Right now, the volume on NFTs as a thing is about 4-5x right now what it was at the start of Nov 2021.

The number of ‘holders’ of NFTs has also almost doubled since that November 2021 mark.What must go up, must come down - and all that, but don’t let stupid headlines make your mind up for you. They’re there to make you click on things.

So far, we have:

1. Discovered that adding context to a statement makes you think about it totally differently

2. NFTs aren’t actually dead, the number of holders (even with spoof addresses & multi wallets) is increasing, the volumes are still pretty big considering how young the industry is and the market cap is already at about $20 billion. 

But wen sports Pet?!Well, here we go.

The Valley of Liquidity

The reason I’m writing this piece is that I’m more and more interested in how sports & NFTs interact with each other. Now, and most importantly in the future.

A lot of it has to be brand driven, at first.

Why?

Because they have the licenses and the IP. 

Sports projects will come and create their own IP and create huge NFT projects, I’m sure of that, at some point.

But the start of this has to be IP based, as NBA Top Shots and Sorare have so far shown us.

But even then, many brands are scared to venture into this world.

Because as soon as they create something, it’s out there on the secondary market and they have no control over it. And unlike physical collectibles, these things are traded *instantly* on a secondary market.

I don’t have to open a pack of baseball cards, pull a rare one, verify and authenticate ownership and legitimacy, list it, then ship it to a buyer. Blockchains do that for me and there’s no physical item.

And beyond control, brands are scared of zero.

They’re scared of launching something, selling it to their customers, and the resale value being zero. And look, that’s not a great look if you’re solely money-driven and have priced these digital items expensively.

But this phenomenon or fear, is only really seen with digital items, isn’t it?

Back to the physical world…

In 2020, the sports card market went crazy.

Growing by 142% with 4 million more cards sold than 2019.

In 2018, Panini had revenues of about $1.4 billion.

In 2020, Topps had revenues of over $500m.

This is a huge market. People want to buy, own and collect physical collectibles. Right now, up until this day.

But they also want to collect digital things.

I asked myself a question…why do I not instantly think what a panini sticker is worth when I open a pack?Now collecting, trading and buying cards to profit from them - is completely fine. There is absolutely *nothing* wrong with that. But it was a question that made my brain ‘click’.

The answer lies in the liquidity of markets and how quickly they can dry up. And become liquid again.

As I wrote earlier, opening a pack of panini stickers, to resell some of them takes time, energy, and multiple participants: Me the seller packaging the item, listing the item, a courier transporting it, and the buyer receiving it only after they’ve bought it using a third-party transaction service).

With a digital pack of NFTs, I can buy a pack, it’s then in my wallet, is instantly tradeable and the liquidity is better.

It can also be in a variety of mediums depending on the pack of digital things; still image, video, video & audio - etc.

This is really interesting. 

The liquidity, frictionless ability to buy, sell & trade, lack of middlemen and couriers, makes this amazing.

But it also means that people can race to zero. 

And that often creates a ‘bad’ reputation for NFTs. That liquidity, or lack thereof when there’s oversupply, creates price discovery really quickly, for better or worse.

We can see the listing near zero dollars.

But is that actually that bad?

I don’t look at a panini sticker and instantly think it’s worth $0.

If I go and buy a $9 NBA Top Shots pack now, I don’t think I’d look at some of them as worthless - even though they are, like those panini stickers, worthless or worth very little.

People want to collect things.

They want to own things online.

You can be a detractor, a disbeliever or whatever - but two things are true:

1. People want to collect digital things (the market has shown that to be true)

2. NFTs are here to stay (not a certainty, but the market is telling us it’s extremely likely)

The E-Sports brand 100 Thieves (100T) gave away these NFTs after winning an E-sports tournament a couple of months ago.

They were claimed by 750,000 people.

They’re not really reselling - there’s hardly any volume on the secondary market. The last sale prices were almost $2. There’s a slight difference here in that these were given away for free. But if 100T sold these for $5 as memorabilia, the demand would still have been insane. People wanted these things, clearly, whether they had value or not.

I literally know people who have never owned an NFT and never had a crypto wallet before, create one so they could claim it.

I asked them, why? They told me it was because they liked 100 Thieves, it looked cool and they wanted it.

And that’s really, all that matters.

People want stuff.

People have always wanted stuff. And now they want digital stuff. 

More sports crypto stories & things to put on your radar

• DraftKings make their foray into NFTs…this could be a deep dive in the future!

• A-Rod (Alex Rodriguez) thinks blockchain can bring sports-team ownership to the masses

• HSBC enters the metaverse via Sandbox and they’re starting with Sports, Esports & gaming. 

• FanCraze is raising $100m and one of their backers is Cristiano Ronaldo. FanCraze is an online platform for trading digital Cricket collectibles.

• The Martian Premier League (MPL) launched with some success yesterday. The NFT project is built around a storyline that sees Martians creating their own football league - the MPL.

• Candy Digital x College Sports NFTs

• F1 Delta Time, at one point a very popular F1 NFT project has shut down after failing to land another license for their product. 

Great reads, great tweeting and more general ‘stuff’

• Matty DCL is starting to be the go-to when it comes to NFT tweets RE: brands

• I’m starting to get concerned at just how poorly people in very prominent government positions understand blockchains. This is crazy, really.

• Bored Ape Yacht club (yes the monkey pictures) launched their own token, ApeCoin ($APE). It currently has a market cap of almost $3 billion, $10bn fully diluted. People like pictures of monkeys, seemingly. What they do with this token though, is likely going to blow lots of detractors away.

• NFTs aren’t going away. 

• Bob Iger, former Disney CEO & Chairman, has joined the GENIES board…

Thanks!

Thanks for reading the latest edition of the Sporting Crypto newsletter. I’m really happy to see so many people enjoying it and sharing it with their networks. If you enjoyed this, please tell your friends who might be interested - and share it on social :)This newsletter is for informational purposes only and is not financial or business advice. These are my thoughts & opinions and do not represent the opinions of any other business or entity.