Digital Art Market on Ethereum – October 2024
Jean-Michel Pailhon
Executive in the crypto-asset industry / Digital art collector and investor
In this report, we’ll cover the NFT art market’s current state, a focused exploration of generative art and XCopy strong momentum in sales and prices.
Welcome to this month’s insights into the digital art markets on blockchains. Our aim is to provide you with timely, actionable insights to guide your investments as the digital asset landscape evolves.
Macro & Crypto: Ethereum's Price Struggles Amid Layer 1 Volume Declines
Ethereum (ETH) saw a 3.3% price decline in October 2024. As of November 1, ETH is trading around $2,519.68 USD (source). This drop follows a decreasing activity on the trading side, and reflects the rise of Layer 2 (L2) solutions, which draw traffic from Ethereum’s Layer 1 (L1) network, reducing transaction demand on the base layer.
Why ETH Price is Underperforming:
As blockchain volumes shift, ETH’s role may need reevaluation as L2 adoption gains momentum (monthly blockchain volumes).
Why Web3 Adoption is Unstoppable
Despite the recent headwinds in the digital art markets, we don’t change our mind regarding the medium to long term potential of the digital art markets on blockchains, as described in our Grail capital Manifesto:
“We are living through a unique moment in the history of art and culture. Some wise observers coined it “the new renaissance”: the beginning of a fervent period of cultural, artistic, and economic “rebirth”.
And we’re always happy to see other stakeholders from the crypto-assets industry providing with their own vision and predictions, somehow, about Web3 and NFTs. Benoît Pellevoizin from CoinShares recently examined Web3 adoption as a cultural movement, driven by societal shifts toward decentralized ownership and creator empowerment. His perspective underscores Web3’s potential as a lasting change in digital ownership (source):
“So, will crypto, Web3, and DeFi be adopted by the masses? Will they transform our society? If we look through the lens of Raymond Williams's theories, the answer seems to be yes.
NFT Market Update: State of Digital Art on blockchains
Volume and Trader Statistics
The number of NFT market participants has experienced a notable downtrend since 2021 (trader data).
Ethereum is still leading the way in terms of blockchains, with close to 80% of volumes in October (source).
According to a16z (source), we start to see some kind of twist in the NFT market. “NFT appears to have shifted from high-volume secondary market to low-cost social collecting experiences on Zora and Rodeo for instance.”
That being said, Ethereum (layer 1) is still the main market for the most valuable NFTs, especially when in the digital art space. The high-end NFT art market - the segment on which Grail Capital is focusing its research and investments - is a market closely monitored by 5,000-10,000+ daily active collectors and investors. Those are regularly acquiring top artists pieces as soon as markets becomes inefficient for a while (“bargain hunting”).
We tend to agree with what @batsoupyum recently said to @Jediwolf in a X/Twitter thread interview:
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Segment Spotlight: Generative Art’s Market Struggles
Within the overall NFT market, the generative art (GenArt) segment has experienced a massive decrease in price, volume and general interest since 2022. And even over the past 12 months, the overall performance has been pretty bad. Even for the top 10 collections and artists.
GenArt was a top segment of the digital art market on blockchains in 2021-22, but recent challenges include:
Despite all those negative factors, we continue to see some of the top GenArt collections and artists, such as Tyler Hobbs, William Mapan, Snowfro - all being part of Grail Capital’s first investment vehicle - becoming some of the most culturally significant ones of our times, hence some of the most valuable ones, in the coming 5-10 years.
Artist Spotlight: XCOPY’s Continued Dominance
XCOPY continues to lead the NFT art market with standout sales:
1. “Chatbot and Chill” Sale: On October 9, Chatbot and Chill sold for 800 ETH (~$1.96 million), the highest for any XCOPY piece since 2021 (source). This classic, minted in 2018, highlights the high demand for XCOPY’s early 1/1s.
It’s interesting to note that the NFT smart contract royalty program for the secondary sale was well implemented, leading the artist to automatically receive 80 ETH (10% of the overall price paid by the new collector).
2. Recent Auction Success: On November 1, XCOPY’s "data_lords" sold for 164 ETH (~$411,000), a 25% increase in USD terms over 8 months (source).
Grail Capital is actively committed to expanding its XCOPY collection and is currently finalizing an opportunity to secure a rare 1/1 XCOPY work through a private OTC transaction. Qualified investors interested in participating are encouraged to contact us by November 30.
The Layer 2 Storage Dilemma for Digital Art
To conclude, we decided to quickly talk about Layer 2 for digital art. We kind of share the same view as Patrick Amadon on this:
Hint: We’ll continue to collect and invest on Layer 1 top blockchains (Bitcoin and Ethereum, mostly). We’ll continue to monitor other Layer 1s (Tezos and Solana) and will eventually move into those as our (existing and potentially new) investors ask us for an exposure to digital artworks minted on those blockchains. Stay tuned!
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Thank you for reading this month’s report. We hope these insights guide you in navigating the complex, evolving world of digital assets. Stay tuned for next month’s analysis, where we’ll dive deeper into digital art developments and continue tracking key trends in crypto and NFTs.
We founded Grail Capital with the goal of shaping the future of art and culture by making it easy, profitable and safe for more collectors and investors to participate in the digital art market. Our mission extends beyond being an investment fund, aiming to contribute to onboarding and welcoming 1 million new collectors into the digital art space over the next decade and to contribute to making the digital art market to $100 Billion market in the next 10 years.
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2wVery interesting insights! I will subscribe to your newsletter. I’m really happy to see French actors in the crypto art market. As artists, we often tend to focus solely on our art without paying enough attention to the crypto market.
Inhouse artist at Apex Aalborg universitet
1moWhat people don't get, understand is that you don't have to make a living from your art to be an artist, you just have to make art, what happens with it is another matter, a work is not a lesser work because it is not sold, and therefore it does not make you a lesser artist, if the goal was to sell art, then the goal is set, when money people, galleries, speculators go into art, then the work itself is seconded, it becomes a question of branding, that tell the best story to sell a product, it is in itself the most conventional, it becomes the focal point of the work. So my best advice is, if you want to be an artist, create art while you can, sell it or not, do it because you can't help it, and do it when you have the opportunity, it's gone! Don't succumb to conventions speculators who live at your expense, free yourself from these and you will become a better and more whole artist, free yourself from over-the-top speculators who subvert others' values for their own gain, you only have one life , take responsibility, think for yourself! , and create with the awareness that you are and that you will become what you let your mind flow into. Be nice and irresistible kind. OSCAR VELA
Amazing report! You should include the lending market next time. It has found a good market fit for generative art and 1/1 pieces. For instance, Autoglyphs just had a couple of sales YTD, but a thousand loans. Top platforms include NFTfi Gondi or Arcade