While it’s true that event-driven trading is a huge part of SportFi, there are times when Fan Tokens moon in the absence of any notable catalyst. No games. No new signings. Apropos of nothing, a token’s value can climb 10 or 20% in a few hours.

Understanding why some Fan Tokens pump on new news at all is key if you want to gain a panoramic view of the SportFi market. It’s also useful for helping to identify possible buy signals.

What Causes No-News Fan Token Pumps?

This topic came to the fore again recently when the Atlético Madrid Fan Token ($ATM) climbed 46.8% in just seven days, making it the second-highest climber in that timeframe.

A cursory glance at the LaLiga table shows that Atlético are effectively out of the running after 23 games, lying 12 points behind Real Madrid and 13 adrift of leaders Barcelona. Moreover, they have won just one of their last three league fixtures, and lost their most recent at home to Real Betis (Feb. 8).

Why, then, did $ATM take off like a rocket two days after that defeat? $ATM started Feb. 10 at $0.90 and reached $1.44 by midafternoon, an intraday pump of 60% per Socios.com data.

It is not immediately obvious, although there are some possibilities. Argentina international Nico Gonzalez, on loan from Juventus, is reportedly edging closer to joining the club on a permanent deal; rumours are also circulating that Atlético are preparing a £48m bid for Chelsea’s Spanish fullback Marc Cucurella.

Perhaps the most likely reason, though, is the simplest one: traders perceived $ATM to be undervalued ahead of tomorrow night’s Copa del Rey semifinal first leg against Barcelona (Feb. 12).

Atlético may be off the title pace in the league, but they are just two ties away from winning their first major trophy since 2021, when they were crowned Spanish champions. To make the final, they must trump last season’s treble winners in a repeat of last year’s semi which Barcelona won 5-4 on aggregate.

Aside from a few spikes, $ATM has largely traded downward since mid-January. But in SportFi, what goes down often bounces back up; it’s just a question of when. This is often the reason why Fan Tokens rise in value despite no obvious positive news: traders identify the bottom, recognize an opportunity, and drive up the price.

In the case of $ATM, it goes beyond the Barça game. In the coming weeks, Atlético face Club Brugge in a two-leg tie in the UEFA Champions League Knockout Round Play-offs (Feb. 18/24). Their domestic form will also determine whether they can cling on to third-place with Villareal snapping at their heels.

In short, the coming weeks could have a major impact on Atlético Madrid’s season. Which is why traders perceived the value of $ATM to be low and acted accordingly.

Other Drivers of No-News Price Jumps

There are other reasons, aside from simple market dynamics, why Fan Tokens (and digital tokens more generally) can experience sudden, apparently random price jumps.

Most notably, if a token has low liquidity it is more likely to rise or fall based on a comparatively small number of trades. Oftentimes, dramatic surges are driven by some combination of speculatory factors, regulatory rumours or whale activity, whereupon a large holder is able to move the price of an asset (usually one with low liquidity) simply by making one big purchase or sale.

More concrete drivers, of course, include token unlocks and partnership announcements.

If a number of traders are betting against a Fan Token (shorting) and the price unexpectedly jumps for one or several of the above reasons, those traders can be compelled to “buy back in” to stop the bleeding and cover their losses, causing the price to go even higher.

So, what does it really mean if a token pumps randomly? That you should FOMO in immediately? Well, no. It simply suggests the market has dictated that a token is undervalued at that moment: often, the subsequent rise levels out or goes the other way once the positive sentiment has been exhausted.

Other times, the momentum segues into pre-match hype and trading returns to being purely event-driven, with the prospect of further gains based on big wins or losses in the case of defeat.

The fact that Fan Tokens can pump based on new obvious news provides yet another layer of intrigue for SportFi traders seeking to profit from their market activities.

Ronnie McCluskey: Fan Tokens Market Reporter