Art Basel Miami Beach is fast approaching, and amidst the flurry of high-octane auctions and dazzling art fairs that are captivating an art world eager for things to return to normal, inflation rates have been skyrocketing. In order to subvert and operate against inflation as a personal collector, experts have suggested that the accumulation of a robust art collection is a great way to diversify one’s portfolio; unlike bonds, art is a tangible investment that is legible to all and, in general, reliable when it comes to dividends. That being said, that doesn’t mean the general economic climate doesn’t have an effect on the art market overall.
“One potential headwind is an interest rate cycle where rates rise precipitously over the next few years,” Evan Beard, the National Art Services Executive of Bank of America, told The Art Newspaper. “That will not only make owning art more expensive, but will also mean the opportunity cost of owning art will be more expensive.” Madelaine D’Angelo, the founder and CEO of Arthena, a financial technology firm that establishes pricing transparency related to the art market, has a similar view.
“What we’re seeing in a time of rising inflation is that art has traditionally performed well, and historically during periods like this we also see that there’s an uptick in the market,” D’Angelo told Observer on Monday. “I think we’ve seen that over the past couple of weeks with auction sales being where they are, so I wouldn’t be surprised if there’s a particularly high sell-through rate at Art Basel this year in that people aren’t asking or compromising for the discounts that they usually would in order to get access to that inventory. I think people are just happy to be able acquire works at whatever price they can acquire them, it’s almost like there’s this frenzy.”
Amidst this climate that’s making collectors feel like they absolutely need to buy something are NFTs, the exploding phenomenon that’s roping crypto enthusiasts into the art world. However, D’Angelo is of the mind that NFT fever and generalized inflation represent “two completely disparate markets. NFTs are born out of the need of diversification from your ETH portfolio, the same way that people look at art as a hedge against their other more traditional investments,” D’Angelo said. “So you’re not necessarily seeing people who would be buying NFTs buying traditional or institutional works, and the people that are buying more traditional works aren’t necessarily participating in NFTs.”