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In It for the Money: More Than 80% of NFT Art Buyers Are Motivated by Investment Returns | Barron's

In It for the Money: More Than 80% of NFT Art Buyers Are Motivated by Investment Returns | Barron’s

Most buyers of NFT art are in for the money.

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Most buyers of art-based nonfungible tokens, unique digital assets better known as NFTs, are in for the money, not for the art itself, a survey finds.

About 82% of NFT buyers surveyed said they were motivated by investment purposes, according to the Hiscox Online Art Trade Report released Tuesday. Of those who bought NFTs worth at least US$25,000 in the past 12 months, 95% cited investment returns as the key reason for their purchase.

The survey was conducted in January by ArtTactic, a global art market research firm based in London, on behalf of Hiscox Group, a global specialist insurer. Findings are based on responses from 595 art buyers worldwide.

There is a significant gender divide in terms of why collectors buy NFTs.  While 96% of male buyers made their purchases for investment reasons, only 67% of female buyers are motivated by potential returns, according to the report.

The world of NFTs “is still very much a speculator’s market so we can expect many more ups and downs,”
Robert Read,
head of art and private client at Hiscox Group, said in a press release on Tuesday.

However, the traditional art market will likely continue to embrace NFT art, with major auction houses, galleries, art fairs, and blue-chip artists offering them to broaden their client base, the report said.

In 2021, Christie’s, Sotheby’s, and Phillips sold US$185 million worth of NFTs through public auctions—including the US$69 million Christie’s sale of
Mike Winkelmann’s
(aka Beeple’s) Everydays: The First 5000 Days—having sold none in 2020, according to the report.

Outside of NFTs, the overall online art market has continued to mature and is “no longer snapping at the heels of the art establishment but are now very much part of it,” Read said.

Nearly two thirds of art buyers surveyed bought art or collectibles online in the past 12 months. Among those who had purchased art online previously, more than eight out of 10 bought pieces online last year, according to the report.

Fine art remains the top category for online sales in the past 12 months, but decorative art and jewelry saw the biggest increases. According to the survey, 56% of art buyers bought decorative art and design online in 2021, compared to 48% in the prior year. Meanwhile, 26% of respondents said they had purchased jewelry online in the last 12 months, compared to 15% in 2020. 

Buyers are growing more confident with their online purchases, especially young collectors, of which more than three in 10 bought their first artwork online, up from 14% in 2020. Additionally, nearly half (47%) of new art buyers—those who started buying art within the past three years—made their first art purchase online, compared to 30% in 2020.

“The online art market has become an entrance into the art world for new art buyers, many of whom have never ventured into a gallery or auction house,” the report said.

Based on the growth rate recorded in the last two years, Hiscox projected that online art sales would reach US$13.5 billion in 2021, a 72% increase from the market size in 2020.

This content was originally published here.