Two Years since the Historic Beeple Sale, What’s Happened to the NFT Market?

On March 11, 2021, Christie’s sold Everydays: The First 5,000 Days (2021) by Mike Winkelmann, a.k.a. Beeple, for $69.3 million, making him the third-most expensive living artist at the time. But rather than acquiring a painting or a sculpture, the winning bidder for Beeple’s work received a non-fungible token (NFT)—a unique digital identifier that used blockchain technology to certify and verify ownership of this digital artwork.

Crypto-enabled sales had been gaining traction before the Christie’s auction. According to NFT analyst NonFungible.com, the market for NFTs had already quadrupled in 2020, with the total value of transactions increasing by 299% year over year to more than $250 million.

There were a number of eye-catching sales in the run-up to the Beeple sale: An NFT of popular GIF “Nyan Cat” sold for $600,000; the YouTuber Logan Paul sold around $5 million worth of tokens in a single day; and mainstream brands were also getting involved, with the NBA, in collaboration with Dapper Labs, selling a tokenized “highlight” of a dunk by LeBron James for $200,000. Beeple himself had also previously sold a work for $6.6 million on Nifty Gateway, an online digital art marketplace.

The Christie’s sale, however, marked a landmark moment for the art world. With the single-lot auction, the 256-year-old institution brought the mechanism of NFTs into the eyeline of traditional art world watchers, while inviting a new generation of collectors into its gilded orbit.

It was also the first time that a major auction house had sold a purely digital NFT, and the sale sent discussion of the technology into a fever pitch within the art world—leading to mainstream coverage beyond the collectors and gallerists who usually follow auction results. In other words, a wider, more powerful swathe of people were now paying attention. Heady proclamations followed. “I believe we are witnessing the beginning of the next chapter in art history, digital art,” said Beeple in a statement after the sale.

But since then, the mainstream perception of NFTs has come to be characterized as the province of fraudsters and grifters rather than artists and innovators. More than $100 million worth of NFTs were publicly reported as stolen between July 2021 and July 2022 according to Elliptic, and, by September of last year, NFT transaction volume had collapsed by 97% from its peak in January 2022, according to Dune Analytics.

In 2021, many had assumed that NFTs would seamlessly enter the commercial art world, and yet this prediction also appeared to lose steam. According to Artsy’s 2022 Gallery Insights Report, just 11% of galleries sold NFTs in 2021, and 67% said that their clients had not even inquired about them. For the galleries that did sell NFTs, half said that their NFT total sales value was $5,000 or less. Some 20% of galleries earned between $5,000 and $14,999 from NFTs, and just 5% made more than $250,000 selling NFTs.

This volatile, boom-bust picture of NFTs is perhaps due to their close relationship with cryptocurrencies—unregulated asset classes used primarily as investment vehicles instead of as art. While this perception has undoubtedly contributed to those bleak figures above, there are still interesting artworks made and sold as NFTs.

“With the bubble and speculation that was around NFTs in the early days, it sadly took away from the conversation around the art itself,” said Christopher Y. Lew, a former curator at the Whitney Museum of American Art and current chief artistic director of Outland, a platform dedicated to fostering critical discussions on emerging digital technologies. “Now that things have calmed down, we’re coming back around to really talk about, ‘What is the artwork?’”

There are several examples of established and emerging artists using NFTs in unexpected and fascinating ways. London-based artist Shezad Dawood has collaborated with Web3 art platform Zien to create a series of NFTs, “Sea of Redemption”. The series is a clever, satirical play on the “cult of crypto” and a response to the crash in the NFT market, drawing on imagery from the oceanic ecosystem and mythic beginnings. Educated at the Royal College of Art and with artwork in the Tate collection, Dawood sits firmly in the “established” artist category, alongside the likes of Loie Hollowell, Damien Hirst, and others who have minted token-based works.

Dawood views the changing perceptions of digital art in a similar way to the rise of video art in the 1970s, which fought to be accepted as fine art when it first emerged. “In that initial phase of a new medium coming into play, you inevitably have lots of people trying their hand at it, and then it takes a little while for the dust to settle and for more qualitative assessments to be made,” Dawood told Artsy. “I think we’re starting to create very interesting ways to think about this as an art form that is not only valid but viable in terms of shaking things up.”

This is not lost on institutions, many of which are beginning to recognize the importance of token-based artworks. With acquisitions at the likes of the Los Angeles County Museum of Art, the San Francisco Museum of Modern Art, and the Buffalo AKG Art Museum, NFTs are making their way into major public art collections.

Perhaps most significantly, the Centre Pompidou acquired a series of 18 NFTs in a joint effort with the French Ministry of Culture. The series, which includes works by the likes of Sarah Meyohas, Fred Forest, Agnieszka Kurant, Jonas Lund, and Jill Magid, will join France’s national collection of modern and contemporary art. “This collection reaffirms our support for artists in their conquest of new means of expression, which is the foundation of modern art,” said the museum’s director, Xavier Rey. Several other museums, from Kunsthalle Zürich to the Palazzo Strozzi, have also staged exhibitions with NFT artworks.