The NFT market is warming up, and top auction houses are once again following Crypto Assets.

As Bitcoin continues to hit new highs and Ethereum approaches its peak from 2021, those in the art industry who were previously optimistic about Crypto Assets are once again stirring. Early signs indicate that the pioneering reformers in the art world are indeed seizing this trend.

Within weeks of the U.S. president's re-election, Crypto Assets prices surged rapidly. The president demonstrated a strong determination to support decentralized digital assets. Prior to this, the founder of a certain crypto platform purchased Maurizio Cattelan's artwork "Comedian" for a staggering $6.2 million, which was essentially just a banana taped to the wall. This exorbitant transaction quickly made headlines in major media outlets, and the buyer even paid for it using Crypto Assets.

In this context, a well-known auction house will hold its first auction next month in Saudi Arabia accepting payments in ETH or BTC. This is the first time a traditional auction house supports Crypto Assets payments at an entire live auction of physical items. The auction house stated that this change could bring a new group of buyers in regions where digital art and Crypto Assets activities are very active. The auction features a total of 119 lots, including modern and contemporary artworks from the West and Saudi Arabia, luxury items, and a jersey worn by football star Cristiano Ronaldo, as well as generative "AI data paintings" created by leading practitioner Refik Anadol. His large-scale work "Machine Illusion - Space | Chapter Two: Mars" uses data from space telescopes to create surreal organic landscapes, with an estimated value between $800,000 and $1,200,000.

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 non-fungible tokens (NFT) has indeed brought a batch of new crypto assets millionaires and billionaires. NFT is a unique digital asset that connects art with blockchain and can be used to create geometric abstract paintings and cartoon comics.

In 2021, several well-known auction houses began accepting Crypto Assets to purchase certain physical artworks. Previously, an auction house sold Beeple's "Everydays: the First 5000 Days," which is an NFT that combines 5000 digital images, many of which are satirical. Its final buyer was the founder of a Crypto investment fund, who purchased the artwork for an astonishing price of $69 million.

Since then, eligible physical works have begun to lean towards technological sophistication. For example, a bright yellow painting created by Keith Haring in 1984, depicting a crowd captivated by computers, sold for £4.3 million. Currently, every major auction house has dedicated NFT and digital art platforms where sellers and buyers can use Crypto Assets.

For the art market, practitioners hope that through NFT and its related alternative coins, they can open the door for new buyers into the typically high-priced art domain. A well-known individual personally completed this journey, spending over $6.2 million in the process. He initially purchased the digital artist Murat Pak's screensaver "Cube" NFT artwork, priced at $1,500 each. A few months later, he bought KAWS's "Untitled (Companionship)" for about $300,000. Just five months later, he ventured into heavyweight modern art by purchasing Alberto Giacometti's "Nose" sculpture for $78 million.

However, not everyone in the art market warmly welcomes the impact of Crypto Assets. Some art consultants believe that the market atmosphere has stabilized, having shaken off the turmoil caused by Crypto Assets speculators. The image of Crypto Assets primarily targeting young buyers is at odds with the current lack of diversity in the art auction market itself. Furthermore, new entrants are often viewed with suspicion, largely stemming from the conservative and closed nature of the art market.

In this complex market, skepticism about the user base is merely a superficial reason; concerns about the use case are the core issue. The appeal of artworks in a secret market that can convert unstable paper profits into transferable tangible assets is already sufficient to make them a target for money launderers, and the cryptocurrency-based NFTs are even more likely to become a new avenue for money laundering.

In China, Crypto Assets are banned, "the reason is based on numerous anti-money laundering cases". In the EU, the latest anti-money laundering and counter-terrorism financing rules have tightened regulations for all businesses providing services related to Crypto Assets, including a ban on anonymous payments.

The compliance team of the auction house is ready and takes a relatively cautious approach towards Crypto Assets. Outside of specialized NFT platforms, only a few auction items meet the criteria. One auction house stated that its NFT sales have reached $150 million so far.

Although the NFT market has lost much of its heat, it may see a turnaround as the market improves. According to the latest "Global Art Market Outlook" released by ArtTactic, 12% of experts are optimistic about the performance of NFTs this year. While this figure is far lower than the previous high of 73% in 2023, it is double that for 2024.

At the same time, a certain auction house stated that the average age of its NFT buyers is 42 years old, while the average age of all auction participants is 54 years old. This aligns with the auction house's strategy of targeting the younger generation, and it is also a key strategy emphasized by its new CEO last week, who stated plans to "protect cultural heritage while focusing on innovation - attracting new audiences, regions, and technologies."

In fact, the art market has been in a noticeably depressed state over the past two years, urgently needing the introduction of fresh blood. According to ArtTactic's data, the total auction volume of several major auction houses decreased by 26% in 2024, while it declined by 19% in 2023.

Against this background, perhaps any little bit of traffic that can be captured is beneficial. Therefore, as the Crypto Assets stage lights up again, the auction houses, which are fighting with their backs against the wall, can only prepare to join this grand performance.