The NFT craze fades, top auction houses bet on Crypto Assets

The art world’s enthusiasm for Crypto Assets seems to be rekindling. As Bitcoin continues to hit new highs and Ethereum approaches its 2021 peak, those in the art industry who were once full of anticipation for Crypto Assets are once again stirring.

Recently, the Crypto Assets market has shown a positive trend. The U.S. President has expressed support for decentralized digital assets, driving rapid growth in Crypto Assets. Against this backdrop, a renowned auction house plans to fully accept ETH or BTC payments for the first time next month in Saudi Arabia, marking the first instance of a traditional auction house fully supporting Crypto Assets transactions in a physical auction. The auction house stated that this initiative is expected to attract new buyer groups in regions where digital art and Crypto Assets are thriving.

This auction features a total of 119 lots, covering contemporary art from the West and Saudi Arabia, luxury goods, and memorabilia from sports stars. Among them is a generative work created by an artificial intelligence artist, estimated to be valued between $800,000 and $1,200,000. This piece uses data from space telescopes to create a surreal organic landscape.

In fact, before the pandemic, the art market struggled to attract people from the tech industry. The rise of non-fungible token (NFT) has brought a new wave of wealthy Crypto Assets entrepreneurs to the market. NFT is a unique digital asset that combines art with blockchain technology, often used to create geometric abstract paintings and cartoon works.

In 2021, several top auction houses began accepting Crypto Assets for the purchase of certain physical artworks. Previously, an auction house sold Beeple's NFT piece "Everydays: the First 5000 Days" for an astronomical price of $69 million, which is a work made up of 5000 digital images, and the buyer was the founder of a Crypto Assets investment fund.

Since then, eligible physical works have also begun to align with technological aesthetics. For example, a painting created by Keith Haring in 1984 depicting a crowd mesmerized by computers sold for £4.3 million at auction. Currently, major auction houses have launched dedicated NFT and digital art platforms, allowing buyers and sellers to trade using Crypto Assets.

For the art market, industry insiders hope to create channels for new buyers to enter the high-end art sector through NFTs and related alternative coins. Some crypto assets entrepreneurs have successfully transitioned from purchasing moderately priced digital art to acquiring modern artworks worth millions of dollars.

However, not everyone has an optimistic view of the impact of Crypto Assets. Some art consultants believe that the market has shaken off the turbulence brought by Crypto Asset speculators and is now exhibiting a stable and thoughtful atmosphere. The image of Crypto Assets primarily targeting young buyers does not align with the current lack of diversity in the art auction market. Furthermore, the art market has long been cautious towards newcomers, and this conservative and closed nature is also a significant barrier.

A deeper concern is that Crypto Assets may be used for money laundering. Art itself has the characteristic of converting unstable profits into transferable tangible assets, and encrypted NFTs are more likely to become a new avenue for money laundering. Several countries and regions have already implemented relevant regulations to supervise enterprises providing Crypto Assets services.

Despite this, auction houses are still actively positioning themselves. One auction house stated that its NFT sales have reached $150 million. Although the NFT market's popularity has significantly declined, the industry expects a turnaround as the market improves. According to the latest survey, 12% of experts hold an optimistic view on NFT performance this year, which, although far below the peak, is already double that of last year.

Auction house data shows that the average age of NFT buyers is 42, lower than the overall auction buyer average of 54. This aligns with the auction house's strategic positioning to attract a younger generation. The new CEO of a certain auction house emphasized that in the future, they will "focus on innovation while protecting cultural heritage, attracting new audiences, regions, and technologies."

In fact, the art market has remained sluggish for the past two years, urgently needing fresh blood. Data shows that the total transaction volume of major auction houses has declined for two consecutive years. Against this backdrop, auction houses seem to have no choice but to prepare for the return of Crypto Assets, hoping to bring a glimmer of vitality to the sluggish market.