The Art of NFT Investing

02 Jul 2023 by rate3

A study by the Economist Intelligence Unit found that art sales in the United States increased by 25% in the two years following the September 11 attacks. The study also found that the average price of art sold at auction increased by 15% during this time period.

Another study, by the Art Basel and UBS Global Art Market Report, found that art sales in China increased by 50% in the five years following the global financial crisis of 2008. The study also found that the average price of art sold at auction in China increased by 75% during this time period.

These studies suggest that HNWI may turn to art during times of social and economic upheaval as a way to cope with stress and uncertainty.

NFTs — New Assets Class

SVET Value uses NFTs (Non-Fungible Tokens), which have emerged in 2019 as a new and innovative asset class, to assist High Net Worth Individuals (HNWI) in accumulating and accruing their wealth in several ways:

Diversification: NFTs offer HNWI an opportunity to diversify their investment portfolios beyond traditional asset classes such as stocks, real estate, and commodities. By investing in NFTs, HNWIs can gain exposure to a unique and growing market that is not directly correlated with traditional financial markets.
Potential for Appreciation: NFTs have shown the potential for significant price appreciation. HNWIs can acquire valuable digital collectibles, art, virtual real estate, or other unique assets in the form of NFTs. If demand for these NFTs increases over time, their value can rise, allowing HNWIs to accumulate wealth through capital appreciation.
Access to Exclusive Opportunities: NFTs often grant ownership rights, access to limited editions, or unique experiences. HNWIs can leverage their financial resources to acquire exclusive NFTs, such as rare digital art pieces, celebrity collaborations, or virtual assets tied to popular platforms or games. Owning such NFTs can provide status, bragging rights, and potential future value if demand for these exclusive items grows.
Royalties and Secondary Market Transactions: Some NFTs include smart contracts that automatically generate royalties for the original creator or rights holder whenever the NFT is resold. This feature can benefit HNWIs who acquire NFTs from emerging artists or popular creators. As the NFTs change hands in the secondary market, the original creators can earn ongoing income, contributing to the wealth accumulation of HNWIs who hold these NFTs.
Investment in Virtual Economies: NFTs are often associated with virtual worlds, metaverses, or blockchain-based gaming platforms. HNWIs can invest in NFTs tied to these virtual economies, which can generate revenue streams through in-game purchases, virtual property rentals, or participation in decentralized finance (DeFi) ecosystems within these digital environments.
It’s important to note that the NFT market is relatively new and evolving rapidly. While NFTs offer potential wealth accumulation opportunities, they also come with risks such as market volatility, technological uncertainties, and regulatory considerations. HNWIs should thoroughly research and understand the NFT market, engage with reputable platforms and creators, and consider seeking advice from financial professionals experienced in digital assets before making investment decisions.

NFT Market

The global art NFT market is a relatively new market, but it has grown rapidly in recent years. In 2021, the market was valued at $2.44 billion, and it is projected to reach $33.7 billion by 2027.

The art NFT market is dominated by a few key platforms, such as OpenSea, Rarible, and SuperRare. These platforms allow artists to create and sell NFTs, and they also provide a marketplace for buyers and sellers to trade NFTs.

The art NFT market is divided into two main segments: the primary market and the secondary market. The primary market is where new NFTs are sold for the first time. The secondary market is where NFTs that have already been sold are resold.

The primary market is dominated by artists, who sell their NFTs directly to collectors. The secondary market is dominated by collectors, who buy and sell NFTs from each other.

The art NFT market is a dynamic and growing market. The growth of the market is being driven by a number of factors, including the increasing popularity of NFTs, the growing demand for digital art, and the increasing availability of art NFTs online.

Here are some of the factors that contribute to the size and structure of the global art NFT market:

The increasing popularity of NFTs: NFTs have become increasingly popular in recent years, and this has led to an increase in the demand for art NFTs.
The growing demand for digital art: Digital art is becoming increasingly popular, and this has led to an increase in the demand for art NFTs.
The increasing availability of art NFTs online: Art NFTs are becoming increasingly available online, and this has made it easier for people to buy and sell art NFTs from all over the world.
The art NFT market is a vibrant and dynamic market with a lot to offer collectors, artists, and art lovers alike. The market is expected to continue to grow in the coming years, and it is likely to become even more diverse and accessible.

Here are some of the key players in the global art NFT market:

OpenSea: OpenSea is the largest NFT marketplace in the world. It allows users to buy, sell, and trade NFTs of all types, including art, music, and collectibles.
Rarible: Rarible is another popular NFT marketplace. It allows users to create and sell their own NFTs, and it also provides a marketplace for buyers and sellers to trade NFTs.
SuperRare: SuperRare is a high-end NFT marketplace that focuses on selling digital art. It has a curated selection of NFTs, and it is known for its high-quality art.
KnownOrigin: KnownOrigin is a British NFT marketplace that focuses on selling digital art. It has a wide selection of art, and it is known for its fair fees.
Foundation: Foundation is a NFT marketplace that focuses on selling digital art. It has a community-driven platform, and it is known for its innovative features.
These are just a few of the key players in the global art NFT market. The market is constantly evolving, and new players are emerging all the time.

NFTs in the Bear Market

However, the 2022–2023 bear economy has affected the NFT art market in a number of ways. First, the overall value of NFTs has declined, as has the number of NFTs being traded (for example, according to some estimates the volume on the OpenSea is down by 99%). Second, the prices of NFTs have also declined, and some NFTs have even lost all of their value. Third, the number of buyers and sellers in the NFT art market has decreased.

There are a number of reasons for these changes. First, the overall economic downturn has led to a decrease in the amount of disposable income that people have available to spend on NFTs. Second, the recent volatility in the cryptocurrency market has made people more cautious about investing in NFTs. Third, the increasing number of scams and frauds involving NFTs has also made people more wary of the market.

Despite these challenges, the NFT art market is still a relatively new market, and it is possible that it will recover in the future. However, it is also possible that the market will continue to decline, and that NFTs will become a niche market.

Here are some of the factors that have contributed to the decline of the NFT art market:

The overall economic downturn: The global economy has been in a downturn since the beginning of 2022, and this has led to a decrease in the amount of disposable income that people have available to spend on NFTs.
The volatility of the cryptocurrency market: The cryptocurrency market has been very volatile in recent months, and this has made people more cautious about investing in NFTs.
The increasing number of scams and frauds: There have been a number of high-profile scams and frauds involving NFTs in recent months, and this has made people more wary of the market.
At the same time, it is still too early to say what the long-term impact of the bear economy will be on the NFT art market. However, it is clear that the NFT market is here to stay.

To make some projections for the future growth of the NFT market, let's briefly review the current state and growth projections for both the art and movie markets (another popular form of NFT investment).

Movies Market

In 2022, the global box office was worth $42.2 billion. This is expected to grow to $51.5 billion in 2023.

The global movie market is divided into two main segments: the theatrical market and the home entertainment market. The theatrical market is where movies are first released, and it accounts for the majority of the global box office. The home entertainment market is where movies are released after they have been in theaters, and it includes DVD, Blu-ray, and streaming services.

The theatrical market is dominated by the United States and China. In 2022, the United States accounted for 34.5% of the global box office, and China accounted for 26.1%. The European Union accounted for 17.9% of the global box office, and India accounted for 6.3%.

The home entertainment market is more evenly distributed. In 2022, the United States accounted for 28.5% of the global home entertainment market, and China accounted for 21.3%. The European Union accounted for 19.1% of the global home entertainment market, and India accounted for 6.7%.

Here are some projections about the growth of the global movies market:

The global movies market is expected to grow at a CAGR of 7.2% from 2022 to 2030. This growth will be driven by a number of factors, including the increasing popularity of streaming services, the growing demand for international films, and the increasing number of people who are going to the movies.
The streaming market is expected to be the fastest-growing segment of the global movies market. This is because streaming services are making it easier for people to watch movies at home, and they are also offering a wider variety of movies than traditional television channels.
The international market is also expected to grow at a significant pace. This is because the demand for movies is growing in emerging markets, such as China and India.
The number of people going to the movies is also expected to grow in the coming years. This is because movies are becoming more immersive and interactive, and they are also offering a wider variety of genres to choose from.
Here are some of the factors that could drive the growth of the global movies market in the coming years:

The increasing popularity of streaming services: Streaming services have made it easier for people to watch movies at home, and this has led to an increase in the demand for movies.
The growing demand for international films: International films are becoming more popular, and this is leading to an increase in the demand for movies from different countries.
The increasing number of people who are going to the movies: The number of people who are going to the movies is increasing, and this is leading to an increase in the demand for movies.
The development of new technologies: The development of new technologies, such as virtual reality and augmented reality, is likely to lead to new ways of experiencing movies, which could drive demand.
Of course, there are also some risks that could hinder the growth of the global movies market. These include:

The rise of piracy: Piracy is a major problem in the movies industry, and it could hinder the growth of the market.
The changing preferences of consumers: The preferences of consumers are constantly changing, and this could make it difficult for the movies industry to keep up.
The economic downturn: The economic downturn could lead to a decline in the demand for movies.
Art Market

The global art market is estimated to be worth around US $67.8 billion in 2022. This makes it one of the largest and most active markets in the world. The market is dominated by the sale of Western art, but there is also a growing demand for Asian and Latin American art.

The geographical distribution of the global art market:

United States: 44%
United Kingdom: 18%
China: 17%
Hong Kong: 10%
France: 6%
Germany: 5%
Italy: 4%
Switzerland: 3%
The global art market is divided into two main segments: the primary market and the secondary market. The primary market is where new artworks are sold for the first time. The secondary market is where artworks that have already been sold are resold.

The primary market is dominated by galleries, which sell artworks to collectors. The secondary market is dominated by auction houses, which sell artworks to collectors and institutions.

The growth rate of the art market has been steadily increasing in recent years. In 2022, the global art market grew by 3% year-over-year, reaching an estimated value of $67.8 billion. This growth is being driven by a number of factors, including the increasing wealth of the global population, the growing popularity of art as an investment, and the increasing availability of art online.

The art market is expected to continue to grow in the coming years. According to a report by Art Basel and UBS, the global art market is projected to reach $83.7 billion by 2025. This growth will be driven by the continued growth of the global economy, the increasing popularity of art as an investment, and the increasing availability of art online.

Here are some of the factors that are expected to drive the growth of the art market in the coming years:

The continued growth of the global economy: The global economy is expected to continue to grow in the coming years, and this will lead to an increase in the disposable income of people around the world. This increase in disposable income will lead to an increase in the demand for luxury goods, including art.
The increasing popularity of art as an investment: Art is increasingly being seen as a viable investment, and this is leading to an increase in the demand for art from investors. Art is a unique asset that can appreciate in value over time, and it can also provide investors with a hedge against inflation.
The increasing availability of art online: Art is becoming increasingly available online, and this is making it easier for people to buy and sell art from all over the world. This increased accessibility will lead to an increase in the demand for art from people around the world.
NFTs and Arts

The growth of the arts and movies markets is indicative of the growing demand for digital art and collectibles. As these markets continue to grow, so too will the demand for NFTs, which offer a unique way to own and collect digital assets.

Here are some reasons why this thesis is likely to be true:

The increasing popularity of digital art: Digital art is becoming increasingly popular, and this is leading to an increase in the demand for NFTs. NFTs allow artists to sell their work directly to collectors, without the need for a gallery or auction house. This has led to a surge in demand for NFT art, and the market is expected to continue to grow in the coming years.
The development of new NFT applications: The development of new NFT applications, such as NFT-based gaming and ticketing, is also likely to drive growth in the market. For example, NFTs could be used to represent tickets to movies, as well as other digital content related to movies, such as scripts, posters, and behind-the-scenes footage. This has led to a surge in demand for NFT movies, and the market is expected to continue to grow in the coming years.
The growing interest from institutional investors: Institutional investors are starting to take an interest in NFTs, and this could lead to further investment in the market. For example, in 2021, the investment firm Grayscale Investments launched a new fund that invests in NFTs. This suggests that institutional investors are seeing the potential of NFTs as an asset class.
NFTs Market Growth

There are some projections for the growth of the NFT market in the period of 2023–2050:

2023: The NFT market is expected to continue to grow in 2023, but at a slower pace than in 2022. The overall economic downturn is likely to have a negative impact on the market, but the continued development of the NFT ecosystem is likely to offset some of this decline.
2024: The NFT market is expected to pick up again in 2024, as the economy begins to recover. The development of new NFT applications, such as NFT-based gaming and ticketing, is also likely to drive growth in the market.
2025: The NFT market is expected to reach a tipping point in 2025. By this time, the technology will be more mature, the ecosystem will be more developed, and the applications for NFTs will be more widespread. This is likely to lead to a surge in demand for NFTs, and the market is expected to grow exponentially.
2030: By 2030, NFTs are expected to be a mainstream technology. They will be used for a wide variety of applications, including art, music, gaming, and ticketing. The market is expected to reach a value of \$1 trillion by this time.
2050: By 2050, NFTs are expected to be ubiquitous. They will be used for a wide variety of applications, and they will be a key part of the digital economy. The market is expected to reach a value of \$10 trillion by this time.
These are just projections, and it is impossible to say for sure what the future holds for the NFT market. However, the potential for growth is enormous, and the market is likely to play a major role in the digital economy of the future.

Here are some of the factors that could drive the growth of the NFT market in the coming years:

The increasing popularity of digital art: Digital art is becoming increasingly popular, and this is likely to drive demand for NFTs.
The development of new NFT applications: The development of new NFT applications, such as NFT-based gaming and ticketing, is also likely to drive growth in the market.
The increasing adoption of blockchain technology: The increasing adoption of blockchain technology is likely to make NFTs more accessible and secure, which could lead to further growth in the market.
The growing interest from institutional investors: Institutional investors are starting to take an interest in NFTs, and this could lead to further investment in the market.
Of course, there are also some risks that could hinder the growth of the NFT market. These include:

The volatility of the cryptocurrency market: The cryptocurrency market is very volatile, and this could make NFTs a risky investment.
The lack of regulation: The NFT market is currently not regulated, and this could make it vulnerable to fraud and scams.
The lack of consumer awareness: Many consumers are not yet aware of NFTs, and this could limit the growth of the market.
Despite these risks, the potential for growth in the NFT market is enormous. The market is still in its early stages, and it is likely to evolve significantly in the coming years.

SVET Value and NFTs

The NFT market is growing rapidly, and the art and movie markets are two of the most popular segments. SVET Value has allocated some space for NFT Arts and NFT Movies because they believe that these segments have the potential for significant growth in the future.

The art market is a traditional market that has been around for centuries. However, the advent of NFTs has revolutionized the art market, making it more accessible and transparent. NFTs allow artists to sell their work directly to collectors, without the need for a gallery or auction house. This has led to a surge in demand for NFT art, and the market is expected to continue to grow in the coming years.

The movie market is another popular segment for NFTs. NFTs can be used to represent tickets to movies, as well as other digital content related to movies, such as scripts, posters, and behind-the-scenes footage. This has led to a surge in demand for NFT movies, and the market is expected to continue to grow in the coming years.

SVET Value believes that the NFT market is still in its early stages, and that there is significant potential for growth in the future. By allocating some space for NFT Arts and NFT Movies, SVET Value is positioning itself to capitalize on this growth.

Here are some of the reasons why SVET Value has allocated some space for NFT Arts and NFT Movies:

The NFT market is growing rapidly, and the art and movie markets are two of the most popular segments.
NFTs have the potential to revolutionize the art and movie markets, making them more accessible and transparent.
The market for NFT Arts and NFT Movies is still in its early stages, which means there is significant potential for growth.
SVET Portfolio believes that NFTs are a disruptive technology that has the potential to change the way we interact with art and movies.