Between 2020 and 2021, a cryptocurrency boom led several crypto-oriented companies to strike deals with sports organizations like the NBA and UFC. One of the biggest deals was blockchain giant Crypto.com signing a $700 million deal with the Staples Center, one of the world’s largest sports and entertainment venues, in Los Angeles. Angeles. The Singapore-based company has also signed deals with the UFC and Formula 1 for promotion at various sports venues and sports equipment.
Crypto.com wasn’t the only crypto company to expand its reach into sports or entertainment. In exchange for the Miami Heat arena naming rights for 19 years, FTX, a cryptocurrency derivatives exchange, paid $135 million. And under an exclusive agreement, Coinbase became the exclusive cryptocurrency exchange for the WNBA, NBA, and NBA G League.
In 2022, there was little warning that the crypto winter was coming.
Winter has arrived
In May, the main stablecoin TerraUSD lost its peg to the US dollar. In a single day, TerraUSD lost $60 billion in value. After that, major crypto lender Celsius suspended withdrawals, citing liquidity concerns. The company followed by filing for bankruptcy.
They were just some of the first dominoes to fall in the crypto world, and many more soon fell. As noted in a National Research Group (NRG) report on the state of the cryptocurrency industry, the market is “down more than 70% from the highs it reached near the end of of 2021, and many of the most popular coins are trading at less than half of what they were at the start of the year.”
As the NRG report also notes, the crypto market has already undergone “dramatic” corrections. Is the current crypto winter so different? And more importantly, will the crypto winter freeze the budding love affair between entertainment, professional sports, and cryptocurrency?
According to NRG, the “crypto winter” has affected the public view of cryptocurrency in various ways.
For example, NRG reports that “70% of consumers believe they have at least a ‘moderate’ understanding of cryptocurrencies.” If true, that’s a notable change from a June 2021 YouGov survey that found 69% of Americans agreed with the statement, “I don’t really understand cryptocurrency.”
In contrast, at least 61% of respondents said they were aware of the “crypto crash” or “crypto winter.” It appears that the heavy and negative media coverage of the crypto winter over the past three months has significantly boosted consumer awareness of the market crash.
NRG notes, “This is no longer a technological novelty; increasingly, having some knowledge of cryptography and how it works is considered part of basic financial literacy.”
Even though consumers have been exposed to a great deal of crypto news, however, NRG reports that few bother to do any more in-depth research. Bitcoin remains the most household name, and consumer awareness of other coins like ETH, Dogecoin or even the popular Shiba Inu meme coin hasn’t grown much since the start of 2022. Even with the media attention on TerraUSD’s detachment from the dollar (arguably one of the most significant crypto events in recent memory), only 7% of consumers are aware of the term “stablecoin”.
Crypto Sponsorships Continue… Mainly
Crypto.com’s Al D’Agostino gave a succinct response to dot.LA when we asked for further comment on the company’s association with the Staples Center: “Crypto.com remains fully committed to its sports sponsorships. We are well funded and these are multi-year contracts, which will continue to play a crucial role in our mission to accelerate the global transition to cryptocurrency.”
While the New York Post reported in late June that FTX had backed out of sponsorship talks with the Los Angeles Angels, the crypto exchange took on new sponsorship obligations with a $210 million naming deal for the team. esports professional TSM, aka Team SoloMid.
But as recently as August 2, cryptocurrency exchange Voyager pulled out of a multi-year sponsorship deal with the US National Women’s Soccer League (NWSL). Additionally, the exchange is on the verge of bankruptcy after its CEO made millions at the 2021 peak of the cryptocurrency boom.
In comments accompanying his Winter Crypto Report, NRG Global Chief Information Officer Marlon Cumberbatch said “the crypto crash has done little to dampen Americans’ enthusiasm for cryptocurrencies – for investors, the recent crash is just the latest in a long series of ups and downs, rather than the start of a terminal decline.”
Cumberbatch also offered advice on how businesses as large as professional sports teams and small as local businesses could strategize to survive the crypto winter. “Start engaging openly and constructively with policy makers,” Cumberbatch said, “continue to invest in educating consumers about the technology and promoting practical use cases for crypto…”
Cumberbatch also encouraged better cryptocurrency education for everyone. From the C-suite to the crypto penny investor down the street, people need to better understand what they’re getting into. “Recent media coverage has done a lot to increase consumer awareness of crypto,” he said, “it’s not the same as increasing understanding. enough about the technology to be able to make informed decisions and protect yourself from unnecessary risks.”
Cumberbatch did not immediately respond after dot.LA requested specific comment on crypto company sponsorships such as the Crypto.com deal and Staples Center.
Where do we go from here?
The NRG report on the general state of crypto did not predict doom and gloom, but noted that the crypto landscape “is vast, complex, and ever-changing.”
“More than anything else,” the report continues, “recent events in the crypto market have made it clear that there is a need to educate potential investors. Before they buy, it is essential that investors consumers understand the technology on more than just a surface level – and that they know enough about crypto to be able to make informed decisions and protect themselves from unnecessary risk.And today’s leading crypto companies will have a central role to play in facilitating this educational path.
Cryptocurrency exchanges have benefited more from their sponsorships than sponsored organizations, and at a minimum, the crypto winter has put a damper on more multimillion-dollar transactions for now. But if the National Research Group report proves prescient, it could be a temporary lull for cryptocurrency-focused companies paying big bucks for wide name recognition. The Crypto.com arena is here to stay…for now. If crypto winter gives way to crypto spring, we may soon see more Coinbase stadiums and Bored Ape Yacht Club restaurants.
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