Why cryptocurrency is back in the art market

It may not be the most expensive sale on last week’s auction list in New York, but there’s no doubt that Maurizio Cattelan’s sale Actor (2019) was the most talked about topic this week.

The work, a banana taped to the wall, sold for $6.2 million at Sotheby’s, including fees, well above its estimate of $1 million to $1.5 million. But the sale was also notable for another reason: Sotheby’s confirmed that the winning bidder, cryptocurrency entrepreneur Justin Sun, would pay in cryptocurrency.

The sale was part of a growing trend that is once again gaining momentum in the art world: the rise of cryptocurrencies. Museum acquisitions, new collectors and even a coin have all made headlines in the art world in recent months, sparking discussions about the role of these tokens in the market.

Sun, in speaking about the sale, acknowledged its importance as a case study for how the crypto community could be involved in the conversation around artwork, particularly those with viral potential online. “It’s not just a work of art; it represents a cultural phenomenon that bridges the worlds of art, memes and the cryptocurrency community,” Sun said. “I believe this piece will inspire more thought and discussion in the future and become part of history.”

The sale of Actor in crypto has shocked some corners of the art world but is less surprising to others.

“The wealth of cryptocurrencies is now encroaching on spaces once dominated by traditional collectors and has become difficult for the art world to ignore,” said Alejandro Cartagena, co-founder of Fellowship, a gallery specializing in human-human collaboration. machine. “Cryptoentrepreneurs are bringing new energy to the art world, challenging its established hierarchies and expanding its horizons in an exciting new dynamic.”

Although they have been around since the creation of Bitcoin in 2009, cryptocurrencies first entered the art market in 2021 when they gained popularity among the public. This is primarily driven by the growth of non-fungible tokens (NFTs), unique digital identifiers that use blockchain technology to certify ownership of artworks, as well as other assets. Although NFTs are distinct from cryptocurrencies, both are based on blockchain technology and are associated with each other.

While the fervor around the NFT market has died down since their initial appearance on the market, demand for this type of work is, like other cryptocurrencies, on the rise towards the end of 2024. According to MSN, the The NFT market is on track to close in November with “strong momentum”, after a month of October where sales volume reached $356 million, an increase of 18% compared to September.

“Interest in cryptocurrencies in the art market is growing, but not with as much fervor as during the 2020-2021 crypto boom,” said Stefanie De Regel, head of platform development digital art TAEX. “This steady growth reflects the evolving integration of blockchain technology and the art world, driven by opportunities…such as NFTs and innovative platforms for creative expression.”

The frenzy around Cattelan’s sale highlighted the fact that crypto is back with a vengeance, more than ever following Donald Trump’s re-election in the United States. Even though most cryptocurrencies collapsed during the “crypto winter” of 2022 (a sign of their essential volatility), they are on the rise again.

Earlier this month, the global crypto market hit a peak of $3.2 trillion, boosted by the belief that the new president will enact crypto-friendly regulatory policies. This was further reinforced last week when Trump appointed pro-crypto hedge fund manager Scott Bessent as Treasury Secretary, helping Bitcoin reach a new all-time high.

There are other cultural signals for crypto market observers, showing that the new administration intends to recognize its importance. Another Trump appointee, Elon Musk, will co-lead a new “Department of Government Effectiveness” (abbreviated to DOGE, likely in a sly reference to the Dogecoin coin). Musk is a crypto enthusiast and once vowed to send Dogecoin “to the moon”, popular slang used in crypto circles to express his belief. The cryptocurrency bearing the name of the new department reached its highest level in three years this month.

Bitcoin is not the only cryptocurrency on the market: there are thousands of other currencies and blockchain-backed tokens that are traded online. And Cattelan’s sale also led to his own rise. The $BAN or Comedian cryptocurrency is not affiliated with Sotheby’s but describes itself as “inspired by the work of Maurizio Cattelan, depicting a banana stuck on a wall.” The coin was picked up in discussions by online speculators, who began trading it at high volumes. The meme coin (a term given to cryptocurrencies generally inspired by the Internet and cultural trends) saw its market capitalization – the total value of all its coins – soar to $300 million. It is now listed on major crypto exchanges such as Binance and Bybit, an important sign of legitimacy in the crypto world.

It was later revealed that Michael Bouhanna, head of digital art and NFTs at Sotheby’s, created the $BAN cryptocurrency as what he called a “spontaneous project and personal hobby” inspired by by the “conceptual questioning of value”, which Actor as depicted in a work of art.

As the price began to climb and the coin gained traction in crypto circles, Bouhanna was accused on social media of “insider trading.” Bouhanna took to X to deny accusations that he made a $1 million profit, noting that he did not “promote $BAN or encourage anyone to buy it.”

Institutional support for NFTs has also become more widespread. NFTs are part of the collections of the Center Pompidou and LACMA. Last week, the Toledo Museum of Art in Ohio became the first major museum to acquire art using cryptocurrency when purchasing digital art. Abyssinian Queen (2024) by the Ethiopian artist collective Yatreda ያጥሬዳ. The purchase was made using USDC, a stable coin (a cryptocurrency pegged to a traditional or “fiat” currency like USD or Euro).

The decision to purchase the work, explained Adam Levine, president, director and CEO of the museum, was to “respect and align with the practices of the artist collective we were working with.”

“Just as we paid in euros when purchasing from a French gallery or in pounds sterling when dealing with an English auction house, it seemed appropriate to transact in Yatreda’s preferred currency ያጥሬዳ, a collective of web3 artists,” he told Artsy.