The enthusiasm for NFT has waned, top auction houses' attempts with Crypto Assets

With Bitcoin reaching new highs and Ethereum nearing its 2021 peak, those in the art industry who once had high hopes for Crypto Assets are once again stirring. Early signs indicate that the pioneering reformers in the art world have indeed seized this trend. Within weeks of the U.S. presidential re-election, the prices of Crypto Assets surged, and the president showed strong support for decentralized digital assets.

Next month, a well-known auction house will hold its first physical auction in Saudi Arabia that supports payments in ETH or BTC. This is the first time a traditional auction house has accepted Crypto Assets payments throughout a live auction. The auction house stated that this initiative is expected to attract new buyer groups in regions where digital art and Crypto Assets are active. The auction includes 119 lots, featuring contemporary artworks from the West and Saudi Arabia, luxury items, jerseys of famous football players, and generative "AI data paintings" created by Refik Anadol. His large-scale work "Machine Illusion - Space | Chapter Two: Mars" (2021 ) created a surreal organic landscape using data from space telescopes, with an estimated value between $800,000 and $1.2 million.

In fact, before the outbreak of the COVID-19 pandemic, the art market struggled to attract people from the tech industry due to differences in style. The rise of the non-fungible token (NFT) has indeed brought some new crypto assets billionaires. NFT is a unique digital asset that links art with blockchain and is often used to create geometric abstract paintings and cartoon comics.

In 2021, several auction houses began accepting Crypto Assets for the purchase of certain physical artworks. Subsequently, eligible physical works started to lean towards a tech-savvy taste, such as a bright yellow painting created by Keith Haring in 1984, depicting a crowd mesmerized by computers, which sold for £4.3 million. Now, every well-known auction house has its own dedicated NFT and digital art platform, allowing sellers and buyers to transact using Crypto Assets.

For the art market, practitioners hope to open channels for new buyers to enter the typically high-priced art field through NFTs and related alternative coins. A well-known entrepreneur personally completed this journey, starting with the purchase of a digital artist's screensaver-style "Cube" NFT work and culminating in the acquisition of Alberto Giacometti's "Nose" sculpture for $78 million, showcasing the transition from digital art to heavyweight modern art.

However, not everyone warmly welcomes the impact of Crypto Assets. Some industry insiders believe that the market atmosphere has stabilized, freeing itself from the turmoil caused by Crypto Assets speculators. The image of Crypto Assets mainly attracting young buyers is at odds with the lack of diversity in the art auction market itself. In addition, new entrants are often met with skepticism, largely stemming from the conservative and closed nature of the art market.

In this complex market, the doubts about the user base are merely superficial reasons; the concerns about the use cases are the core issues. As a secret market that can transform unstable paper profits into transferable tangible assets, art has already attracted money launderers, and NFT with encryption is more likely to become a new avenue for money laundering.

Governments and regulatory agencies around the world have started to take action. In China, Crypto Assets are banned; in the EU, the latest anti-money laundering and counter-terrorism financing rules have tightened regulations on all businesses providing services related to Crypto Assets, including a ban on anonymous payments.

The compliance team of the auction house is prepared to take a cautious approach towards Crypto Assets. Only a few auction items qualify, aside from specialized NFT platforms. One auction house stated that its NFT sales have reached $150 million to date.

Although the NFT market has lost most of its heat, it is expected to see a turning point as the market improves. According to the latest "Global Art Market Outlook" report, 12% of experts are optimistic about the performance of NFTs this year, which, although far lower than the 73% peak in 2023, is still double that of 2024.

A certain auction house stated that the average age of its NFT buyers is 42 years, while the average age of all bidders is 54 years. This aligns with the auction house's strategy of positioning its business towards the younger generation, and is also a key strategy emphasized by its new CEO, which is to "preserve cultural heritage while focusing on innovation—attracting new audiences, regions, and technologies."

In fact, the art market has been in a noticeable downturn over the past two years, in urgent need of fresh blood. Data shows that the total auction volume of several top auction houses decreased by 26% in 2024 and by 19% in 2023.

In this context, any opportunity that could bring traffic may be worth seizing. Therefore, as Crypto Assets once again become the focus, auction houses in distress have no choice but to prepare to join this new adventure.