As the NFT craze subsides, auction houses' attempts with Crypto Assets revive

As Bitcoin hits new highs again and Ethereum approaches its peak from 2021, those in the art world who once had high hopes for Crypto Assets are stirring once more.

Early signs indicate that disruptors in the art industry have indeed seized this hot topic. Within weeks of the U.S. presidential re-election, the price of cryptocurrencies rapidly surged, as the president showed a strong commitment to supporting decentralized digital assets. Previously, a well-known founder of a crypto platform purchased a controversial artwork at a New York auction for $6.2 million – which was essentially just a banana taped to the wall. This transaction garnered widespread attention, as the buyer chose to pay with cryptocurrency.

In this context, next month, a well-known auction house will allow the use of ETH or BTC for on-site auction payments in Saudi Arabia for the first time. This is the first time a traditional auction house supports encryption currency payments throughout the entire on-site auction for physical auctions. The auction house stated that this change may attract a new group of buyers in regions where digital art and encryption currency activities are active. This auction features a total of 119 lots, including contemporary artworks from the West and Saudi Arabia, luxury goods, and jerseys from sports stars, as well as generative "AI data paintings" created by well-known artists.

In fact, before the outbreak of the COVID-19 pandemic, the art market found it difficult to attract people from the tech industry due to differences in taste. The rise of NFT ( NFT ) has indeed brought a batch of new wealthy Crypto Assets enthusiasts. NFT is a unique digital asset that connects art with blockchain and is often used to create geometric abstract paintings and cartoon comics.

In 2021, several top auction houses began accepting payments in Crypto Assets for some physical artworks. An NFT piece composed of 5,000 digital images sold for an astonishing price of $69 million, with the buyer being a founder of a crypto investment fund. Since then, qualifying physical works have also started to lean towards a tech-savvy aesthetic, with paintings depicting crowds mesmerized by computers selling at auction for £4.3 million.

Currently, every well-known auction house has established its own dedicated NFT and digital art platform, where sellers and buyers can use Crypto Assets. For the art market, practitioners hope that NFTs and their related alternative coins can open up channels for new buyers to enter the high-priced art field. Some investors have completed the transition from purchasing digital art to collecting traditional master works, including the acquisition of Alberto Giacometti's sculpture for $78 million.

However, not everyone views the impact of Crypto Assets on the art market with optimism. Some industry insiders believe that after shaking off the turbulence caused by Crypto Assets speculators, the market atmosphere has become more stable and thoughtful. The image of Crypto Assets primarily attracting young buyers contradicts the lack of diversity in the art auction market itself. Furthermore, newcomers are often viewed with suspicion, which largely reflects the conservative and closed nature of the art market.

A deeper concern is that Crypto Assets may be used for money laundering. Art itself has the characteristic of turning unstable paper profits into transferable tangible assets, and NFT that is converted into crypto is more likely to become a new avenue for money laundering. Some countries have already banned or strictly restricted Crypto Assets trading, and the European Union has tightened relevant regulations.

Nevertheless, the auction house is still cautiously advancing its Crypto Assets business. Reports indicate that a certain auction house's NFT sales have reached $150 million. Although the NFT market has significantly cooled down, industry insiders remain cautiously optimistic about its prospects as the overall market improves.

It is worth noting that the average age of NFT buyers is 12 years younger than that of traditional auction buyers, which aligns with the strategy of some auction houses to attract the younger generation. With the art market remaining sluggish, auction houses urgently need to inject new vitality. Data shows that the total auction volume of major auction houses has continued to decline over the past two years.

In this case, any trend that may bring new opportunities is worth paying attention to. As the Crypto Assets market becomes active again, auction houses seem to be preparing to re-engage in this field, hoping to turn around the market downturn.