The NFT craze fades, new opportunities for Crypto Assets at top auction houses

The art market has remained sluggish over the past two years and is in urgent need of new vitality. According to statistics, the total transaction volume of major auction houses decreased by 26% in 2024 and by 19% in 2023. In this context, any opportunity that can bring new buyers is particularly important. With the cryptocurrency market heating up again, auction houses are preparing to meet this new challenge.

The price of Bitcoin continues to reach new highs, and Ethereum is also approaching the peak of 2021, which has made those in the art world who have high hopes for Crypto Assets eager again. Early signs indicate that innovators in the art industry have already seized this trend. Within weeks of President Trump's re-election, the price of Crypto Assets surged, and Trump showed strong support for decentralized digital assets.

In this context, Sotheby's auction house will hold its first physical auction in Saudi Arabia next month that accepts ETH or BTC payments, marking the first time a traditional auction house supports Crypto Assets payments throughout a live auction. Sotheby's stated that this move is expected to attract a new group of buyers in regions active in digital art and Crypto Assets. The auction features a total of 119 lots, including contemporary artworks from the West and Saudi Arabia, luxury goods, and a jersey from football star Cristiano Ronaldo.

In fact, prior to the outbreak of the COVID-19 pandemic, the art market struggled to attract individuals from the tech industry due to cultural differences. The rise of the non-fungible token (NFT) has opened the door to the art market for some newly wealthy crypto assets individuals. NFT is a unique digital asset that combines art with blockchain technology, often used to create geometric abstract paintings and cartoon comics.

In 2021, major auction houses began accepting Crypto Assets for the purchase of certain physical artworks. Subsequently, eligible physical works also started to align with technological tastes, such as a painting by Keith Haring created in 1984 that depicts a crowd being attracted by a computer, which sold for £4.3 million at auction. Now, every renowned auction house has established dedicated NFT and digital art platforms, where buyers and sellers can trade using Crypto Assets.

For the art market, industry insiders hope to open up channels for new buyers entering the high-end art sector through NFTs and related alternative coins. However, not everyone welcomes the impact of Crypto Assets. Some argue that the image of Crypto Assets primarily targeting young buyers does not align with the lack of diversity in the art auction market itself. Furthermore, the art market has historically maintained a cautious attitude towards newcomers, and this conservative and closed nature also increases the difficulty of acceptance.

In addition to concerns about the user base, the more fundamental issue lies in the questioning of the purpose. Art pieces can convert unstable paper profits into transferable tangible assets in the secret market, making them a favored tool for money launderers. The cryptocurrency-based NFTs may further exacerbate this problem. In response, the European Union has tightened anti-money laundering and counter-terrorism financing regulations for all businesses providing services related to crypto assets, including a ban on anonymous payments.

Nevertheless, the auction house is actively exploring the Crypto Assets field. Christie's stated that its NFT sales have reached $150 million. Although the NFT market has cooled down, industry insiders remain cautiously optimistic about its prospects as the overall market improves. According to the latest survey, 12% of experts are optimistic about NFT performance this year, which, although far below the 73% peak in 2023, is already twice that of 2024.

Bonnie Brennan, the newly appointed CEO of Christie’s, emphasized that the company’s strategy is "to prioritize innovation while protecting cultural heritage and attracting new audiences, regions, and technologies." Data shows that the average age of NFT buyers at Christie’s is 42, lower than the average of 54 for other auction types, aligning with the company’s strategic positioning to attract a younger generation.

In the context of a persistently sluggish art market, any opportunity that can bring new vitality is particularly precious. Therefore, as the crypto assets market heats up once again, auction houses are also actively preparing to seize the opportunities in this new wave and inject new vitality into the art market.