NFTs continue to generate headlines and debate within the artworld, but what was their true impact on the art market in 2021? Delving deeper into the subject of NFTs for the first time, the Art Basel and UBS Global Art Market Report 2022 sheds light on the rapidly evolving NFT market and its relationship with the art market. Here we explore key NFT insights from the report, authored by renowned cultural economist Dr Clare McAndrew, Arts Economics, and available to download in full below.
Rising sales values
Rising sales values
Outside the global art market’s $65.1 billion turnover, in 2021 the total sales value of art-related NFTs on the Ethereum, Flow and Ronin blockchains increased over a hundredfold to $2.6 billion. The impact on art businesses remained limited, with only 6% of dealers and 5% of second-tier auction houses selling NFTs in 2021. However interest is on the rise: following landmark NFT sales at Christie’s and Sotheby’s, 19% of dealers and 28% of second-tier auction-houses that had not sold NFTs planned to do so within at least the next two years.
Of more than 2,000 HNW collectors surveyed across 10 key markets by UBS Investor Watch and Arts Economics, 74% had purchased art-related NFTs in 2021. 88% interested in purchasing NFT-based artworks in future, and just 4% not at all interested.
A fast-moving sector
The NFT market continues to present a rapidly-changing picture, with clear patterns yet to be fully established. In 2020, the primary market accounted for 75% of art-related NFT sales by value, but in 2021 this was inversed, with 73% of value derived from resales in the secondary market. Art-related NFTs also changed hands at pace in 2021, bought and resold within an average of 33 days compared with the average resale period on the art market of 25 to 30 years.
Risk still persists
Questions remain about the volatility of the NFT market and its openness to risk. In particular, the unregulated nature of NFT sales platforms has left them exposed to fraud, copyright infringement and artificial price inflation. At present NFTs are hard to reliably appraise, and continue to be subject to the uncertainties inherent in emerging disruptive technology.