Digital Art Review: May 2023
Market poised for takeoff. Squiggles auction mark turning point. Record-breaking Sotheby's auction. $1M for rare Fidenza. ACK grosses $1.4M from new collection. Matrix Partners' first digital artwork.
Ready for takeoff?
Perspective is everything. If we compare the current digital art market against its 2021 summer performance or its peak in April 2022, it may appear as an iceberg in the financial ocean, with valuations, trading volumes, and collector numbers down 50%-90%.
Nonetheless, taking a 3-year panoramic view, we see a flourishing field. Artists selling at least $100 in digital art have mushroomed to 70,000 (150X↑), while the cumulative value of digital art has grown 50X, now exceeding $5 billion. Christie’s and Sotheby’s are including digital art in their marquee auctions and expanding their digital art teams. The world’s largest museums like the LACMA and Centre Pompidou are collecting and exhibiting digital art. Investors are poring $10-$100 million every month to propel the industry forward.
The tide is turning, as speculators exit and new collectors enter the arena. Major financial institutions are plotting their digital art roadmap, while advisors develop investment offerings for discerning clients.
Premium digital art is scarce. It would only take $100-$200 million of fresh new capital to reignite the market and boost prices. As observed previously, this capital will eventually aid emerging artists, thus uplifting the entire market.
Patience, continuous learning, and relationship-building are paramount. Advocate for art and technologies that intrigue you. We've weathered the storm, now it's time for growth.
Yours truly,
Jean-Michel and Tim
Market trends (last 30 days)
Digital art 4%↑ vs ETH 0%↑ vs NASDAQ 6%↑
Collectibles 1%↑ (CryptoPunks 4%↑ Bored Apes 0%↓ Azuki 2%↓)
Generative art 27%↑ (Squiggles 45%↑ Fidenza 41%↑ Ringers 28%↑)
AI art 3%↓ (Genesis 23%↓ Life in West America 9%↑ podGANs 15%↓)
Market trends (2023 year to date)
Digital art 1%↓ vs ETH 59%↑ vs NASDAQ 12%↑
Collectibles 1%↑ (CryptoPunks 22%↑ Bored Apes 8%↓ Azuki 46%↑)
Generative art 15%↑ (Squiggles 35%↑ Fidenza 22%↑ Ringers 2%↓)
AI art 112%↑ (Genesis 207%↑ podGANs 97%↑)
Digital Art: The Next $1 Trillion Asset Class: Since its publication in March, our report was read by over 5,000 art collectors, private wealth managers, entrepreneurs, and investors. It’s the result of our colossal effort which included 100+ conversations with the leading artists, collectors, and entrepreneurs, and over 200 hours of research and writing. Lots of stats and insights into the digital art market: overview and breakdown of major digital art categories, market value of the top-100 collections, price changes since the release, performance comparison to financial indices, and more.
Premium digital art is alive & thriving
We're witnessing a notable shift in market sentiment, evidenced by remarkable sales at Sotheby’s and Christie's and the enthusiastic bidding for ACK’s newest series, The Broken Keys. These collectors are not just scooping up low-priced art but are splurging on top-tier digital artifacts, setting new records in the process.
Alpha Centauri Kid (aka ACK), a visual artist and musician who has emerged as one of the leading artists of a new digital native generation, grossed $1.35 million from the sale of his new collection The Broken Keys. The 48 unique pieces in this collection each revolve around a piano theme, manifesting ACK's passion for music and building on his previous artwork. True to his imaginative flair, ACK has unveiled plans to buy and later auction a Steinway piano embedded with a large skull at Christie's, accompanied by an NFT that can auto-play the holder's chosen music.
Sotheby’s recently hosted the sale of the generative art collection previously owned by the now insolvent digital art fund Three Arrow Capital (3AC). The initial auction of seven artworks raised $2.4 million, which includes $1 million for Fidenza by Tyler Hobbs and $571,000 for Autoglyph by Larva Labs. This extensive collection comprises over 270 artworks, including renowned series like Autoglyphs, Fidenza, Ringers, CryptoPunks, and more. Interestingly, the auctioned pieces achieved 2X-10X premium over their lowest priced counterparts, indicating that buyers value aesthetics, rarity, and provenance, despite the controversy surrounding 3AC's downfall.
Turning our attention to Christie’s, Grant Yun’s digital masterpiece, Midwest, was sold alongside the works of legendary artists like Jackson Pollock, Joan Mitchell, David Hockney, Willem de Kooning, Jean-Michel Basquiat, and others. Bought by renowned art collector Bob Loukas for $107,100, Midwest represents Grant's neo-precisionist style's genesis. Although digital art volume sales have slackened over the past 12 months, the unwavering support from Christie’s and Sotheby’s, demonstrated by their $300 million worth of digital art auctions since 2021, highlights the promising future of this art form.
Pushing boundaries of artist creativity and technological innovation
Imagine if you held a blank canvas from a then-unknown Pablo Picasso in the early 1900s. Imagine if several years later you brought it back to his studio and had him sketch on it. Imagine if he kept iterating on the sketch every now and then, adding colors and textures, turning the original blank canvas into Les Demoiselles d'Avignon.
With NFTs, this imaginative scenario is no longer a fantasy. In May, top-tier digital artist, Patrick Amadon, made headlines with the release of Doppelgänger, a unique series of 256 dynamic artworks. This groundbreaking collection, developed by the smart contract studio Transient Labs, generated a striking $500,000 in sales. The artworks are designed to evolve over time as Patrick adds new elements, offering a continually evolving investment.
The collectors of Doppelgänger are offered an unprecedented choice: to display the artwork as its final iteration or at any intermediate stage of development. In essence, this is a rare opportunity to embrace the unfolding journey of an art piece, while also showcasing the promising potential of investing in dynamic NFTs.
Just as digital art is inspired by traditional forms, digital artists like Ripcache are bridging the gap to the physical realm. His Public // Private series highlights the duality of digital and physical art. Each piece, printed on a two-foot square metal panel, features a section that the owner can “scratch off” to reveal a private key which unlocks the digital counterpart.
Investing for the long haul
The rising recognition of digital art as a credible long-term investment is increasingly palpable amongst collectors, with Chromie Squiggles attracting particular attention. These pieces are being considered less as mere artworks and more as lucrative assets, commanding premium prices from forward-thinking investors.
Chromie Squiggles, the inaugural on-chain generative art collection launched on Art Blocks, are among the most pivotal digital artworks in existence. Originating from Larva Labs, Erick Calderon advanced the concept of artistic permanence, establishing a benchmark for all subsequent generative art collections. Intriguingly, 2% of the 10,000-strong supply remains unreleased, with each new piece algorithmically created on-chain, its nature unknown until its release. Consequently, every auction is awaited with bated breath, as new pieces could be standard or ultra-rare, valued at potentially millions of dollars.
May saw Calderon auction ten new Chromie Squiggles, with proceeds directed towards the ALS Association. The ten pieces yielded an impressive $400,000, or $40,000 each, a significant 50% above the floor price. What explains this premium? The risk-reward ratio is highly attractive, with a 15% chance of securing a rare Squiggle valued above $40,000. The downside, an 85% chance of obtaining a standard Squiggle valued at $20,000, offers limited long-term risk, given the Squiggle's status as a sought-after digital art investment. Whether standard or rare, a Squiggle is a precious asset. For those firm believers in the enduring acceptance and importance of blockchain digital art, no better representation exists than the Squiggle.
A new wave of capital
The infusion of institutional capital into digital artworks has become a pivotal growth driver for this burgeoning sector. Institutional acquisitions represent a novel capital stream with the potential to fundamentally strengthen the digital art market. Recently, Matrix Partners, a premier venture capital firm, made their inaugural foray into digital art, procuring a stunning 3D dynamic photograph by Ryan Koopmans for $45,000.
Given that traditional financial institutions such as JP Morgan and Goldman Sachs boast some of the most extensive art collections globally, it's not surprising that forward-thinking firms like Matrix, investing in next-gen tech companies, are launching their own art collections. These collections serve to endorse the novel generation of artists utilizing cutting-edge technologies.
In fact, venture capital firm True Ventures holds a series of Chromie Squiggles in their portfolio. Additionally, Crypto VC Variant Fund was an early adopter, collecting the inaugural AI art series on the blockchain, Nude Portraits by Robbie Barrat. This influx of institutional capital serves dual purposes - it authenticates digital art as a viable investment asset class, while also hinting at the source of significant future capital inflows.
Market poised for takeoff
At a first glance, digital art prices are down 10%-30% year to date. However, the reality is that the number of pieces listed for sale is only 2%-4% across collections, including less than 0.5% of artworks listed at floor prices. This means that it only takes $100-$200 million of new capital to kickstart a strong momentum. The history shows us that prices move quickly. The Sotheby’s auction of premium generative artworks, as well as the charity sale of ten new Chromie Squiggles drove prices across the top generative art collections by 30%-50% in less than a week. As more buyers and investors join the digital art saga, the limited supply could lead to a thrilling resolution – a potential boom in the market, making this a tale worth remembering for everyone invested in the digital art world.