Will the NFT art market ever recover? Bored Apes and CryptoPunks cashed in and crashed out when the crypto bubble burst – but there’s still a future for digital art tokens built on the blockchain

Apr 27 , 2024

One of 1,200 generative NFT artworks, launched in August 2023, based on Chinese artist Yue Minjun’s Laughing Man self-portraits. Photo: Handout

After Beeple’s overnight success, Bored Ape, CryptoPunk and other once-hot art NFTs have tanked since the market’s boom in mid-2021 to mid-2022 – and while bitcoin has coming surging back this year, digital art tokens have not

‘Art became an auto-generated aesthetic that pushed the artist out of the project,’ notes the Lumiere Project’s Patrice Poujol, whose film company’s NFTs emphasise ‘real access and real experiences’

The non-fungible token (NFT) mania of 2021 was a phenomenon to behold. Dozens, if not hundreds, of celebrities were either pedalling NFT projects or creating their own. Savvy investors were making hundreds of millions of dollars, and it seemed like art – particularly digital art – was more lucrative than ever.

More importantly, the blockchain technology that allowed buyers to irrefutably own said artworks was set to revolutionise the art business. Artists could now sell their work directly in open marketplaces, and investors could buy and sell pieces instantly, without the need to travel to art galleries, work through an intermediary or find storage space for their collections.

Buying, selling and investing in art was suddenly easier and more accessible than it had ever been.

$OPH, an NFT art installation by Sophia Hotung, on display at the Digital Art Fair in Hong Kong’s Central district, in October 2022. Photo: Yik Yeung-man

This phenomenon was supposed to thrive regardless of how well the cryptocurrency market was doing. After all, theoretically, if the price of the cryptocurrency used to buy an NFT dropped, it would mean you’d be buying the art at a discount.

The problem is that these technologies have been reappropriated by businessmen to, instead of helping the artist, squeeze them out of the game

Patrice Poujol, Lumiere Project

Instead, what we saw during the crypto crash of 2022 was that NFTs were hit even harder. Top NFT projects like “Bored Ape Yacht Club”, which during its peak had every piece selling for tens of thousands of US dollars, saw valuations drop by over 90 per cent. The crash led to speculation that NFT mania was never about the art at all, despite what a lot of Web3 enthusiasts wanted to believe. It was about the hype. So where did it all go wrong?

“Arthur Hayes [co-founder and former CEO of cryptocurrency exchange BitMex] wrote an article stating that during the crypto bubble, people didn’t make money on the implementation of projects: they made their big 100-times returns based on speculation,” said Dr Patrice Poujol, who launched a Web3 film company, the Lumiere Project, in 2019. “NFTs didn’t quite work because investors didn’t perceive the value that producers thought was there, and prices came crashing back down to Earth.”

Poujol, who received the first-ever PhD in Hong Kong on Web3 and creative industries at City University of Hong Kong, is a big believer in Web3 technology and the potential of NFTs to create more vibrant ecosystems in all forms of art – from film and music, to digital art and paintings. However, he adds, implementation has been stifled by corporate greed and oversaturation.

Dr Patrice Poujol, founder of the Web3 film company the Lumiere Project. Photo: Handout

“The problem is that these technologies have been reappropriated by businessmen to, instead of helping the artist, squeeze them out of the game,” he explained. “If you look at NFTs, it started out really interestingly with artists like Beeple becoming massive successes, and we started to think, ‘Wow, this is going to allow artists to become millionaires.’ But what we saw within months, not even years, was that art became an auto-generated aesthetic that pushed the artist out of the project.”