While art in the form of non-fungible tokens has grabbed the headlines in recent months, the traditional art industry, with the exception of the big auction houses and a few high profile artists, has approached the market with caution.
Despite the hype, how big is the NFT art market really? How disruptive will it be? And what roles should the traditional actor in the industry play in its future development?
In a report released this week, London-based research and consulting firm ArtTactic explored the global NFT art market to answer these questions and look beyond the current frenzy.
“The rapid growth of the NFT market, but the lack of research and information, gave us the opportunity to start covering this area from the start, and to be able to follow and monitor its developments as and when we are moving forward, ”Anders Petterson, Founder and CEO of ArtTactic, said Penta in an email interview, regarding its NFT Art Market Report 2021, the group’s first analysis of the subject.
How big is the NFT art market?
The definition of what constitutes “NFT art” is still evolving; it is as difficult as defining what is art or what is not art, Petterson says.
There are two broad categories of NFT art platforms, one is open and unorganized platforms such as OpenSea, the other is organized platforms such as Nifty Gateway and SuperRare, according to the report.
ArtTactic’s analysis focused on the NFT art and collectibles space as defined by the largest organized NFT platform, Nifty Gateway, which accounted for 71% of the $ 437 million in NFT art sales in the first four months of 2021, according to Cryptoart data. io.
Between February 2020 and April 2021, Nifty Gateway launched 3009 NFT with over 145,600 minted editions for purchase, featuring digital artwork from 272 artists. NFT raised a total of US $ 305 million, according to the report.
Total primary market sales were strong, with just over 139,000 editions sold, representing an overall sales rate of 95.5%. The average price was US $ 1,228. Secondary market sales volume is almost half of the primary market, but the average selling price was higher, at $ 1,938 per NFT, according to the report.
In the first four months of 2021, Nifty Gateway launched 1,958 new NFTs, compared to just 49 NFTs during the same period in 2020. The sharp increase in the availability of new NFTs is directly related to the growing number of artists presenting their works online.
In March, 60 new artists were launched on the platform, an increase of 140% from the previous month. Overall, an average of 38 artists were launched each month in 2021, compared to an average of 16 artists in the second half of 2020, according to the report.
In the overall NFT market, art has a market share of around 11%, based on the number of sales, according to the report.
Compared to the traditional art market, the volume of the NFT art market is still almost negligible. The traditional art market totaled $ 50.1 billion in 2020, with online sales totaling $ 12.4 billion, according to the annual art market report from Art Basel and UBS. .
What gave birth to NFT art?
“The rapid rise of the NFT market was probably an alignment of the stars – a huge increase in crypto wealth on the back of the exponentially rising Bitcoin price, a lot of celebrity endorsement and social media talk,” Petterson says .
Crypto wealth has grown exponentially amid a 570% rise in Bitcoin prices from around $ 8,500 in March 2020 to over $ 50,000 in March 2021. The crypto market is currently worth around $ 2. $ 5 trillion, according to CoinMarketCap.
“As crypto millionaires face limited opportunities to diversify this wealth in the physical and real world, the crypto investing community has found solace in the emerging world of digital collectibles and NFTs,” says Petterson.
The extensive media coverage of NFTs over the past few months has also generated significant hype in the market. Google searches for “NFT” peaked in March, when a work by digital artist Beeple hit a record $ 69 million at Christie’s.
“Traditional high-end auction houses like Christie’s have given the NFT art market the latest ‘premium’ endorsement,” Petterson says.
How should traditional actors adapt?
The intersection between art and technology is here to stay; Traditional players in the art industry should embrace the trend and participate in the future development of the NFT market, Petterson says.
“The NFT art market is very exciting and opens up new opportunities for artists to develop new markets and monetization models; and for collectors, it offers an attractive new model of ownership, ”says Petterson.
The most successful NFT artist is Mike Winkelmann, the artist known as Beeple, whose art totaled US $ 142.7 million. Next is Pak with $ 42 million in sales, followed by Hackatao with $ 21.6 million in sales, according to the report, citing data from Cryptoart.io.
Major auction houses, including Christie’s, Sotheby’s and Phillips, quickly saw the value of embracing NFTs both from an advertising standpoint and as an instrument to help rejuvenate their aging clientele.
“They have carved out a bridge between the ‘old’ and ‘new’ artistic value systems. This could be a way forward for other players in the art market, ”says Petterson.