Bitcoin Is a Lot Like the Art Market
Both cryptocurrencies and contemporary art rely on scarcity and hype because they have no other real value — though crypto has less price control.
This Bitcoin sculpture is a fitting tribute to cryptocurrency.
Source: Bloomberg
Many people knew this was coming. Cryptocurrencies had one of the worst days in their short history on Wednesday. Bitcoin’s price careened, plunging 31% before recovering to a loss of about 10%. Ethereum, Dogecoin and Binance Coin all fell about 20%. The reasons why are still being sorted; crypto is a relatively new market and we don’t have much data to make sense of it all. But the crypto curious might find some guidance in another corner of the elite investment world: the contemporary art market. Cryptocurrencies and contemporary art are actually very similar commodities.
This week's market meltdown and ensuing rebound wasn't that surprising to crypto’s doubters. Its value never made sense to us. Gold, stocks, bonds and the dollar (which is backed by the goods and services of the U.S. economy) all have some intrinsic worth. They're subject to price fluctuations, too, but ultimately their price settles around something resembling the value of the company or government they represent.