It's not a great time for art auctions

Recently, Comedian by Maurizio Cattelan, the artwork consisting of a real banana attached to the wall with duct tape (but which represents much more), was sold for 6.2 million dollars by the British auction house Sotheby's during an event held in New York, which attracted hundreds of people. However, this was "the only real moment of excitement" of the auction, wrote the New York Times, and "it wasn’t enough to hide the stagnation" in the sector. Sales at the three main auction houses – Sotheby's, Christie's, and Phillips – have declined: in November compared to the same period last year, they dropped by 40%, and by 60% compared to 2022. "It seems that the art market has lost its momentum, its buzz, its indispensability," said Roman Kräussl, a professor of finance at Bayes Business School in London and an expert on art auctions, to the New York Times. One of the reasons for the sector’s crisis has been the recent contraction in supply: many wealthy collectors wanted to wait for the conclusion of the U.S. presidential elections to assess if and how their economic conditions might change in the future.

However, the great enthusiasm for the cryptocurrency sector following Trump’s election, who has expressed support for their spread and for loosening the rules that limit their use, could have positive effects on the art auction market. The total value of circulating cryptocurrencies has increased significantly, rising from about 2.4 trillion dollars to over 3.2 trillion – a level never reached since the existence of these financial instruments. This growth has already stimulated the entry of new investors into the art market, allowing, for example, some young bidders to compete for the purchase of Cattelan's Comedian. At least three of the seven people interested in buying the artwork, including the person who won the auction (Chinese entrepreneur Justin Sun), were cryptocurrency investors. According to Sotheby's, several people interested in a series of works by Keith Haring – sold for a total of 9.2 million dollars during the same event where Comedian was auctioned – had requested to pay with cryptocurrency.

Something is no longer working in the art auction market

Auctions are not only a means of economic evaluation of the sector, but they also reflect the evolution of cultural preferences and the current artistic trends. Exclusive events like those organized by Sotheby's in New York, in addition to measuring the vitality of the auction market, also serve as an opportunity to track the interests of collectors. For example, recently, some of the most famous and traditionally dominant artists in the field have failed to meet the expectations of investors. In particular, some works by Picasso, whose prices have often benefited from high estimates in recent years, have recently shown disappointing results, suggesting a possible shift in the tastes of buyers. A couple of years ago, moreover, the interest of the art auction market seemed to be shifting towards increasingly younger artists – some of whom had just graduated from specialized schools. Surprisingly, their works were fetching considerable prices: this phenomenon, unexpected by many in the industry, reflected collectors' enthusiasm for more contemporary and experimental visual languages. "It’s no longer like that today," writes the New York Times.

In recent auctions organized by Sotheby's, only a small number of young artists managed to exceed the expected sales estimates. With a few exceptions, this data highlights a general decline in interest in the art auction market, which in the immediate post-pandemic period had benefitted from a strong expansion, thanks to the increase in online sales and the entry of new collectors – especially young ones. During that time, contemporary art and NFTs (which later turned out to be a bubble) generated extraordinary attention, pushing many works to reach record prices and attracting a global audience. This wave of enthusiasm allowed the major auction houses to record extraordinary revenues, with sales in 2021 reaching pre-crisis levels. However, after the exceptional boom of recent years, the market now seems to have recalibrated itself, with signs indicating even some difficulty in adapting to new conditions – including more selective demand from collectors and less interest in categories that had traditionally dominated auctions.