Each year, approximately $50 to $70 billion worth of artwork is sold worldwide. Additionally, Art Market employed approximately 3 million people worldwide in 2017 across more than 300,000 businesses. Most of these companies are art galleries. However, art is a complex market as the number of disparate works that compose it. However, several indicators show that the art market can also be very booming and can take a certain quality of haven over time. From now on, the whole question of the development of artistic practices arises. Thus some projects seek to unify classical art with NFT, in a context in which contemporary art has never performed well.
Art market: the measure of transcendence
As Artprice, one of the leading technical information companies, noted in its annual report, there is a significant difference between the average selling price and the average selling price. In 2021, the average selling price in art was over $25,000, while the median price was just over $900. That is, half of artwork sales are less than $900, and A small portion of the business is sold for hundreds of thousands, or several million euros.
What else is related to the art market? According to the Art Price Index, the price of contemporary art had doubled by about 6 during the period 1998-2020 alone. However, the performance of classical art is less important. Thus, the design sector had seen its value double in just over two decades. In general, art recorded an increase of +50% to +70%. It is important to highlight the increase in the prices of artworks in 2008, 2012-2014 and 2020. In other words, artworks generally benefit from periods of crisis.
In addition, another indicator calculated by Sotheby’s shows that the price of the business has doubled up to 500 times its price in 1950. Since the beginning of the 1990s, market capitalization has been multiplied by 4 or 5. The average annual growth rate of business value is estimated at 8.5% by Sotheby’s.
Art & NFT: A basic combination?
We have to keep in mind that Art and NFT are still two completely distinct markets. meaning, Investors in traditional art are rarely the same buyers as they are in NFTs. In fact, NFTs have seen a major boom within the crypto ecosystem, while also generating interest among artists and some traditional investors. Here we will focus on understanding the mechanics of the art market, the NFT market, and their potential mix in the future.
A mixture of art and NFTs?
We have shown that art is A specific market that has proven to be thriving globally over time. This is the market Contemporary art that will thus score the greatest performances. Contemporary art has greatly accelerated the physicalization of works and the expression of new trends. On the other side, there is an emerging NFT market based on tokens (cryptocurrencies). NFTs, which guarantee the authenticity of an object, are not limited to art. It includes any object that requires or may require a single login.
However, there are still several differences between Art and NFT. First, Art market capitalization significantly exceeds that of NFTs. The capitalization of the NFT ecosystem is estimated at approximately $2 billion by Coinmarketcap at the end of July 2022. In addition, NFTs are a technology, not a business in and of themselves. In this sense, art and NFTs should ideally be combined in the sense of art. Thus, NFTs can respond to changes in the art market in several ways:
- first of all, Digital businesses can be authenticated and secured more effectively. Therefore NFTs can be a way to enhance digital artistic creativity.
- On the other hand, NFTs can be used to authenticate physical business. Thus, the costs associated with warehousing the work and with the security required in the case of central auction houses will be reduced.
- Finally, it is important to remember that NFTs gave birth to the metaverse. The metaverse provides access to galleries, public or private, made up of collections of digital works where Users can be simple visitors or owners of these same businesses.
Metaverse, NFT, and Art!
The idea of blending physical artworks with NFTs, as well as the metaverse, has been developed notably through projects such as the private museum. The project includes an investment of several million euros and more than a hundred artists. It is important to point out The progress of this type of project in light of the global and fairly recent development of the cryptocurrency market. Anyway, some Obviously, the interest of traditional art players.
Is the art world heading towards a “Amazon Art” ? It is not impossible. The increasing financialization of the art market in recent decades has accelerated this need for market liquidity.
Recent years have seen an expansion of more abstract and often immaterial art. The important flexibility of creating and exchanging works allows the democratization of art for many people. Art is by nature completely subjective, but works often evolve with the sandstones of technological periods.
NFT: What are the reactions to the crisis?
We represented the Bored Ape Yacht Club group index, expiring in ETH (ethereum). The value of these NFTs, among the most popular, has Decreased over 50% between May 2022 and June 2022. However, the price of NFTs is still “historically” high. Within a year, the collection index went from 3 ETH to over 70 ETH today. This advance was technically made in a bullish channel. The breach of this channel in May suggested a target around 45 ETH (almost) reached.
However, the NFT market remains highly fragmented. Most NFTs equal little or nothing. While a small part of them sometimes sell for several million euros. NFTs will certainly remain somewhat permanently, but their current form will likely evolve. The NFT market quickly became saturated with many similar speculative acts. from now on, Structuring this market is essential to its survival. The survival of NFTs will certainly depend on their ability to attract real interest among art players, especially art galleries and artists.
The first NFT … in the course of great works …
But let’s finally remember a delicious anecdote to keep that in mind NFTs are born from art. And so the world’s first NFT appeared in 2014. Original Artwork Name: Quantum by Kevin McCoy. The artist, who already knew Bitcoin in 2013, wanted to reveal his interest in cryptocurrencies. The last sale took place in 2021 at the famous Sotheby’s home. The business sold for approximately $1.5 million. Vice President of Contemporary Art at Sotheby’s in New York…
“In 10 years in hindsight, if in fact it is to be developed, this piece could represent and symbolize the beginning of something very revolutionary and very influential. »
The art market is one of the oldest in the world. To date, this market represents an influx of several tens of billions of dollars each year. But the fragmentation of the art market also increases the differences in access that exist between expensive masterpieces and abundant works. However, artwork as a whole can make for an interesting and sometimes very profitable store of value. Despite this fact, the heart of the arts industry is still often dominated by a few wealthy players. In 2021, the biggest sale was in New York (Kristi) for $103 million. This is a Pablo Picasso painting Woman sitting near a window (Marie Thérèse)That doubled in price in eight years.
So what about NFTs? Surprisingly, NFTs have naturally been associated with the art market. But violations of this market, and the important difference that still exists between the players in NFT art and classic art, prevents immediate growth. The recent drop in the market has made the team of NFT projects difficult to launch in just a few weeks. Besides, art investors are beginning to show some interest in a more comprehensive application of NFTs in the traditional art market.
Thus, some rare projects (the private museum in particular) are a portrait of a new art show. At the moment, these projects are still under development, limited to the appreciation of technical representatives and the crisis in the cryptocurrency market. The future will show whether digitizing our lives will also be an art.
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Author of several books and economic and financial editor on several sites, for many years I developed a real passion for the analysis and study of markets and economics.