Navigating the Crypto Art Market: What You Need to Know
Like stocks, bonds, gold or Bitcoins, art has value. Last year, symbolic or crypto art made waves in art communities and mainstream culture as it grabbed headlines around the world – but is there any tangible value in it? crypto art?
Professional artists and amateurs alike have jumped on the non-fungible token (NFT) bandwagon. A new type of art collector has emerged who may not understand much about art in the traditional sense, but sees it as a speculative asset for generating future profits.
The traditional art market has long been viewed as a high risk environment, with multiple factors influencing the value of works of art. So how risky is the crypto art market for those unfamiliar with the art world?
The current state of the crypto art market
The total value of the crypto art market stands at nearly $ 444 million at the time of writing. In comparison, the traditional fine art market was a market of around $ 67 billion in 2018, with an average annual return of 7.4% from its top performing artist – contemporary art.
NFT art trading volumes hit a record high of $ 170 million in March, nearly double the February total and more than ten times higher than in January.
The spike is certainly tied to one of the most successful and expensive digital art sales when the digital work of Mike Winkelmann, professionally known as Beeple, was sold at Christie’s for $ 69 million in March. Many other high ranking digital artists besides Beeple have generated millions of dollars by selling their works on various crypto-art trading platforms.
According to the NFT 2020 report, the split between the primary and secondary crypto art markets was uneven. The primary market clearly dominated the charts, meaning crypto artwork was first sold and placed in wallets.
Meanwhile, the secondary market, where collectors trade with each other, remains limited. The market is considered mature when the secondary market becomes dominant, indicating that asset production has slowed down and peer-to-peer trading is taking over.
The quality of cryptographic art
For now, memes, gifs, videos and other digital creations fall under the “art” category and sell like hot cakes. As almost anything can be called NFT art these days, how does this affect the aesthetic quality of the crypto art market?
“The current community of NFT artists is certainly enthusiastic and in love with the technology and the new way to monetize their works,” says Israel-based crypto art curator Alyssa Travis, noting that the quality of NFT artwork varies in different markets.
“Although this is a generalization, we are seeing the concentration of the best artists with the biggest followings in a handful of organized NFT markets, such as Nifty Gateway or SuperRare. “
The expert indicated that the most popular artists with huge subscriber bases tend to focus on organized NFT markets, such as Nifty Gateway or SuperRare.
“Most amateur artists, experimenters, or meme makers create their works in markets without a custodial custodian, like Rarible or OpenSea,” Alyssa said and cautioned “if you are looking for NFT art on OpenSea, Get ready to meet plenty of pixelated collectible characters, cryptocurrency memes, and amateur art.
What Determines Value in Crypto Art?
Navigating the online markets successfully is just the start for potential investors. Amid the ocean of crypto artwork, how should the inexperienced NFT art collector know what to buy and how much to pay?
Ultimately, says Alyssa Travis, the value of NFT artwork is determined by the same factors that determine the prices of traditional fine art:
The notoriety of the artist, the value of other works sold by the same artist, the rarity of their work, their provenance, their historical importance and the amount of labor and skill required to produce the work.
New collectors should research the artist’s follow-up and popularity before investing, Travis said. “Take a look at what the artist has sold for previously and factor in the prices of artwork by similar artists,” she advises, adding that “this is one of the beauties of NFT art: all of these statistics, including provenance, are readily available. “
Another NFT curator and art collector, Crypt0xNinja from France, recommended following clear criteria when choosing which crypto artwork to invest in. “Talented artist. Dope art piece. Good price and low number of editions ”, he enumerated,“ the work of art must be innovative and with identity ”.
The publishing trap
“A single 1/1 edition artwork is worth a lot more than a 1,000 edition,” noted Alyssa Travis. According to her, the quantity of editions is a criterion to consider before investing, especially since the prices of editions in large quantities seem strongly inflated.
“On February 25, Nifty Gateway hosted a 7-minute open edition for ‘Angel’ by Trevor Jones. People could buy as many editions as they wanted for $ 777 in that 7 minute window. It sold 4,157 editions, earning $ 3,229,989. To put that in perspective, “Bitcoin Angel 1/1” last sold for around $ 206,000 and his most expensive work “Genesis” sold for $ 540,000, ”Travis explained,“ although there has been a lottery aspect to this open edition with owners potentially being able to receive an ordered self-portrait or an NFT 1/1 of my portrait of Conor McGregor, the price of this high-volume edition seems massively inflated by compared to the prices of its unique NFT editions.
Room to grow
Currently, all sectors of the NFT art market are growing rapidly, says crypto art expert Alyssa Travis, who sees even more room for the crypto market.
“One of the biggest growth potentials is the certification and tokenization of analog physical art,” she notes. “Confirming authenticity and provenance has always been a problem in the art world, so NFTs could help provide a solution to this problem. “
The technology behind NFTs could still be confusing for traditional art creators, preventing them from symbolizing their works. However, it is only a matter of time before mainstream artists get to grips with TVNs, as the process is already changing the art world.
Brazilian visual artist and collagist Hugo Bastos sold his first NFT work just hours after its creation. In his message to DailyCoin, he confirmed that the sale went much faster and was more profitable than traditional methods of selling art.
It was “faster than licensing a work of art on a website or waiting for people to request prints for it,” Bastos said, “and, financially speaking, it was totally worth it.” .
Is crypto art ‘collectable for everyone’?
Traditionally, art has been viewed as a long-term investment; years if not decades. If a fresh and promising artist maintains a successful career and his status increases, the value of his works increases simultaneously. This process can be extremely time consuming.
The art market is dependent on trends; what is fashionable now may be completely out of fashion a few years later. It’s even more complicated when it comes to contemporary art, as the “star-quality nature of the contemporary artist” might be a more important factor than the quality of the work itself, said the Contemporary British artist Oliver Watt.
The crypto art market is young and still trying to determine the rules. Due to the hype surrounding crypto artwork, there is a significant risk that NFT artwork will be overpriced, making it even more difficult for collectors to assess their future value. Anyone entering the crypto art market purely for speculative reasons should keep the broader contexts and current climate in mind to ensure a successful investment.