The auction house regains its "encryption" ambition, and the art market looks forward to new vitality.

As Bitcoin continues to hit new highs and Ethereum approaches its peak in 2021, individuals in the art world who once had high hopes for encryption are once again stirring. Recently, the recovery of the cryptocurrency market has brought new opportunities and challenges to the art industry.

Within weeks after the re-election of the President of the United States, cryptocurrency prices surged rapidly. The President himself has also shown strong support for decentralized digital assets. Against this backdrop, a well-known auction house will hold its first physical auction in Saudi Arabia next month, accepting ETH or BTC payments. This auction will feature a total of 119 lots, including contemporary artworks from the West and Saudi Arabia, luxury goods, and valuable items from sports stars.

Looking back at history, before the outbreak of the COVID-19 pandemic, the art market struggled to attract individuals from the tech industry. The rise of non-fungible tokens (NFT) has brought a new wave of cryptocurrency millionaires to the market. As a unique digital asset, NFTs connect art with blockchain technology and are often used to create geometric abstract paintings and cartoons.

In 2021, several top auction houses began accepting cryptocurrency for the purchase of certain physical artworks. An NFT piece made up of 5,000 digital images sold for a staggering $69 million, causing a sensation. Since then, eligible physical artworks have also started to lean towards technology aesthetics. Currently, major well-known auction houses have established dedicated NFT and digital art platforms, supporting both buyers and sellers to transact using cryptocurrency.

For the art market, practitioners hope to open channels for new buyers to enter the high-end art field through NFTs and related alternative currencies. Some investors have already made the leap from purchasing digital art to heavyweight modern art, investing over $80 million in the process.

However, not everyone is optimistic about the impact of cryptocurrency. There is a viewpoint that the image of cryptocurrency primarily targeting young buyers is inconsistent with the current lack of diversity in the art auction market. Moreover, the art market has long been cautious towards new entrants, and this conservative and closed nature also poses resistance to the widespread adoption of cryptocurrency.

A deeper concern is that cryptocurrency may be used for money laundering. Art inherently has the characteristic of converting unstable paper profits into transferable tangible assets, and with the NFT being cryptocurrency-based, it is even more likely to become a new avenue for money laundering. Several countries and regions have introduced strict anti-money laundering regulations regarding services related to crypto assets.

Nonetheless, the auction houses are actively responding to this trend. Their compliance teams are ready and taking a relatively cautious approach to encryption. According to statistics, one auction house's NFT sales have reached $150 million to date.

Although the NFT market is currently cooling down, there is still hope for the future as the overall market improves. The latest survey shows that 12% of experts are optimistic about the performance of NFTs this year, which, although far below the peak in 2021, is already double that of last year.

It is worth noting that the average age of NFT buyers is 42 years, significantly lower than the average age of traditional auction buyers at 54 years. This aligns with some auction houses' strategy of targeting the younger generation. As emphasized by the new CEO of a certain auction house, their plan is to "focus on innovation while preserving cultural heritage, attracting new audiences, regions, and technologies."

In fact, the art market has remained sluggish over the past two years and urgently needs an injection of fresh blood. Data shows that the total auction volume of several major auction houses fell by 26% in 2023 and by 19% in 2022. In this situation, any opportunity that may bring in traffic is extremely valuable.

As the cryptocurrency market resurges with vitality, auction houses in distress seem to have no choice but to prepare for this potential transformation that could change the landscape of the industry. Whether the art market can seize this opportunity to revitalize itself remains to be seen.