Subscribe To Our Newsletter

    Get the latest crypto news right into your email box. No spamming. We hate it too. Only pertinent news you need to know

    Latest News

    Coinbase Fixing Problem That Halted Payments From US Banks

    October 9, 2022

    Binance May Spend Over $1 Billion This Year on Deals, CZ Says

    October 9, 2022

    Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

    May 1, 2022
    Facebook Twitter Pinterest LinkedIn
    RareHippo – Crypto, Bitcoin, Blockchain News & Views
    Facebook Twitter Pinterest LinkedIn
    • Home
    • Bitcoin
    • NewsWire
      1. Latest News
      2. Top Stories
      3. Features
      4. What’s Hot
      5. Must Read
      6. Trending
      7. Spotlight
      8. Editors’ Picks
      9. View All

      Coinbase Fixing Problem That Halted Payments From US Banks

      October 9, 2022

      Binance May Spend Over $1 Billion This Year on Deals, CZ Says

      October 9, 2022

      El Salvador’s Companies Barely Bother With Bitcoin

      March 19, 2022

      New Jersey legislation aims to prevent public officials from being gifted NFTs

      March 18, 2022

      Coinbase Fixing Problem That Halted Payments From US Banks

      October 9, 2022

      Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

      May 1, 2022

      Crypto’s Preferred Currency for Political Donations Isn’t Bitcoin. It’s Dollars

      March 19, 2022

      Meta Sued by Australian Watchdog Over Scam Crypto Advertisements

      March 18, 2022

      Binance May Spend Over $1 Billion This Year on Deals, CZ Says

      October 9, 2022

      Two Senators propose crypto legislation for tax exemption on capital gains

      May 1, 2022

      Wall Street Reluctantly Embraces Crypto

      May 1, 2022

      Warren bill draws outcry over broad terms, but seems unlikely to pass

      March 20, 2022

      Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

      May 1, 2022

      Russia-Ukraine War Is Bringing Out the Good, Bad, & Ugly of Cryptocurrencies

      March 18, 2022

      The ‘world’s most advanced’ digital human wants you to buy her NFT art

      March 15, 2022

      FTX crypto exchange wins license in Dubai to open regional headquarters

      March 15, 2022

      Crypto Startup Founded by Ex-Meta Employees Raises $200 Million

      March 16, 2022

      U.K. Crime Agency Wants to Regulate Crypto Transaction Mixers

      March 15, 2022

      A Wall Street Quant Turns His Crypto Firm Into a Unicorn

      March 14, 2022

      Standard Chartered’s crypto custodian to help clients earn yield on token holdings

      March 14, 2022

      Man passing as UN affiliate convicted for crypto scheme

      March 18, 2022

      The Future of Crypto Is Boring — and Bright

      March 15, 2022

      Investors turn to crypto funds, companies as Russia-Ukraine crisis escalates

      March 15, 2022

      Binance Wins Crypto Licenses From Dubai, Bahrain

      March 15, 2022

      Why Bitcoin’s Environmental Problems Are So Hard to Fix

      March 16, 2022

      Americans Want Crypto From Their Banks

      March 15, 2022

      Why Decentralized Exchanges Are Important in the Crypto Economy

      March 10, 2022

      Binance plots M&A spree as regulators scrutinize crypto trading unit

      March 10, 2022

      Amid New Executive Order, White House Director Sheds Light On Crypto Policy

      March 16, 2022

      Bitcoin Evangelist Saylor Tells Economists Why They’re Wrong

      March 15, 2022

      Crypto Mania in Texas Risks New Costs and Strains on Shaky Grid

      March 15, 2022

      Bitcoin’s scared of commitment, Mr. Biden

      March 15, 2022

      Coinbase Fixing Problem That Halted Payments From US Banks

      October 9, 2022

      Binance May Spend Over $1 Billion This Year on Deals, CZ Says

      October 9, 2022

      Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

      May 1, 2022

      Two Senators propose crypto legislation for tax exemption on capital gains

      May 1, 2022
    • Altcoins
      • Ethereum
      • XRP-Ripple
      • Solana
      • Dogecoin
      • Cardano
      • Shiba Inu
    • Topics
      • Cryptocurrencies
      • Investments
      • Markets
      • NFTs
      • DeFi
      • ETFs
      • DAOs
      • Crypto Regulation
      • Metaverse
      • Blockchain & Web3
      • Blockchain Gaming
      • Crypto Exchanges
      • Crypto Mining
      • Stablecoins
      • Cybersecurity
      • Digital Currencies – CBDC
      • Crypto Book Reviews
      • Technology
      • Internet of Things
    • Opinions
    • Explainers
    • Press Releases

      Former Uber LatAm Head of Policy Leads Crypto Ride-Hailer Drife Toward Planned Global Expansion

      March 7, 2022

      European index provider for crypto assets Vinter raises $3.4m funding

      February 22, 2022

      PR – British crypto processor brings in $60 million for expansion in Europe

      January 25, 2022

      PR – CoinMENA obtains 2nd crypt0 license from European Union

      January 25, 2022

      NFT investment specialist looks to acquire Pluto Digital for £96m

      January 24, 2022
    RareHippo – Crypto, Bitcoin, Blockchain News & Views
    Home»NFTs»How a Big NFT Auction at Sotheby’s Ended in Mystery
    NFTs

    How a Big NFT Auction at Sotheby’s Ended in Mystery

    By James Tarmy and Muyao Shen
    March 3, 2022By Bloomberg9 Mins ReadNo Comments
    Facebook Twitter LinkedIn Pinterest Reddit WhatsApp Email Tumblr VKontakte Telegram
    Share
    Facebook Twitter Pinterest Reddit WhatsApp Email LinkedIn Tumblr Telegram

    It was supposed to be a triumph. 

    Sotheby’s first ever standalone live, in-person auction last week devoted to NFTs—104 of the famous CryptoPunk series, grouped into a single lot that carried an estimate of $20 million to $30 million—was trumpeted to be historic.

    Donate to RareHippo Now!

    It was enough to get an expectant crowd  to trek to Sotheby’s York Avenue salesroom on Manhattan’s far East Side to bear witness to an auction that might last just minutes. 

    “It doesn’t get bigger than this,” the auction house tweeted about the sale, writing in a further post that “CryptoPunks were experimental, but are now antique masters. Owning one is symbolic. Owning 104 is iconic.”

    By this, Sotheby’s was referring to the fact that CryptoPunks are one of the most established series in the world of non-fungible tokens or NFTs, a shorthand for digital artworks tied to smart contracts. Created in 2017 by the studio Larva Labs, CryptoPunks number 10,000 items, each different from the next.

    And even though their market has slumped in recent months—the 30-day average price has sunk around 47% from its November 2021 high of about $510,000, to roughly $270,000 in late February, according to market researcher Nonfungible—CryptoPunks still represent one of the closest things to a safe investment in the NFT space. 

    But as the anonymous consignor of the 104 CryptoPunks discovered on Wednesday, a safe investment is not always the same as a good investment. Twenty minutes after the sale was supposed to begin, a loudspeaker in the salesroom announced that the auction was canceled.

    Cryptopunk nfts
    One of the CryptoPunks that was up for auction.Source: Sotheby’s

    In the face of all the hype, Sotheby’s or the consignor determined for unspecified reasons that it wasn’t a good time to sell. 

    Sotheby’s declined to comment on what went wrong; the consignor, who goes by the handle 0x650d, did not respond to multiple requests for comment via their Twitter account. In an emailed statement, Sebastian Fahey, Sotheby’s managing director of EMEA and executive lead for Sotheby’s Metaverse, wrote:“This is not a reflection of the broader NFT market, nor of the inherent desirability of CryptoPunks.

    Floor prices for CryptoPunks remain steady and sales continue apace and at ever increasing values.” Ultimately, Fahey continued, “the decision on behalf of the consignor to ‘hodl’ suggests the collector’s confidence in their value and in the future market for Punks remains strong.”

    Still, the sale’s cancellation could have serious, long-term implications for traditional auction houses, along with the NFT market in general. 

    The Auction

    On the night of the sale, Sotheby’s New York salesroom was filled with a youngish crowd serenaded by a DJ wearing a CryptoPunks mask. It was the first time attendee Brandon Buchanan, founder and managing partner of Meta4 Capital, ever been to a live auction. “I didn’t even know what to wear,” Buchanan says. “I ended up wearing a suit, but everyone was mostly in jeans and a sweater.”

    Sothebys_nft_02: magazine contract one time usage
    The DJ at the Sotheby’s auction, behind a CryptoPunks mask.Photographer: Dolly Faibyshev for Bloomberg Markets

    One thing Buchanan was sure about was how much he was willing to spend. CryptoPunks had been selling, on average, for a little more than $270,000 apiece, meaning that all 104 of them, purchased on the open market, would cost in the range of $28 million—near what Sotheby’s  pegged as the high estimate.

    But if Buchanan wanted to buy 104 NFTs, he already could: There was no shortage of people holding CryptoPunks who were willing to sell. The only reason to bid on a lot containing so many, he’d determined, was if he could get a bargain. “It was going to take a very specific type of bidder,” he says. “You would need to be an investment fund that was going to need a significant discount, to then be able to go flip the CryptoPunks over an extended period of time.” 

    Buchanan arranged for a line of credit from an institutional lender that specializes in crypto, in preparation for making a bid on the lot. He says he was planning to offer from $13 million to $15 million. With auction house fees that could account for about 20% of the sales price, “That would be $15 million to $18 million, all-in,” he says. 

    Buying, Selling, Then Buying to Sell

    It’s clear that both Sotheby’s and the consignor, which the auction house has confirmed tweets via Twitter account @0x650d, thought they could make far more. 

    On Aug. 9, in an apparent reference to the recent purchase of the 104 CryptoPunks, the account tweeted out a thread that started: “Why did I spend $7MM on 104 floor punks? Easy: because I choose wealth. /1” and included the post “So why buy 100 floor punks instead of a single rare one? The short answer is liquidity and diversification. 5/”

    Cryptopunk nfts
    These 104 CryptoPunks carried an estimate of $20 million to $30 million.Source: Sotheby’s

    Then, on Aug. 28, in another tweet thread, the collector announced that the collection would be fractionalized, a term that describes putting all of the CryptoPunks in a digital “vault” and then selling tokens that represent a fraction of the total value of every Punk. “After spending time with the wonderful punk community on Discord, I believe that this will help many, many people share the upside of my collection,” tweeted @0x650d.

    More than 1,800 unique wallets, or people, bought about 17.9% of the total supply of that token, named PUNK Floor, according to the site Fractional.art. According to a tweet by @0x650d, an additional 30% of the total supply of PUNK Floor was sent to a decentralized exchange, a kind of exchange for cryptocurrencies that does not require an intermediary between buyer and seller.

    According to blockchain data analytics firm Nansen, @0x650d’s wallet deposited 516 ETH (the cryptocurrency Ether, whose value can fluctuate dramatically on a minute-by-minute basis) into the same decentralized exchange to help with the liquidity of PUNK Floor’s trading. The same wallet then received trading proceeds of 1,462 ETH, meaning that the collector seems to have made 946 ETH in total.

    Crypto news & Views

    In early December though, when Ether was near its all-time high, @0x650d bought back all the NFTs for 8,836.9131 ETH. Since @0x650d had a majority ownership of the PUNK Floor tokens, that buyback cost only 520 ETH, which was paid to other PUNK Floor token holders, Nansen’s data show. This means that collector @0x650d kept 8,317 ETH.

    It’s not a straightforward process, but the collector’s profits, according to Nansen, were clear: @0x650d gained 426 Ether from the exchange, which is worth roughly $1.3 million, according to Ether’s price on March 2.

    “I’ve got plans,” tweeted @0x650d at the time of the buyback. A month later, the collector tweeted to announce the sale at Sotheby’s.

    Auction Houses + NFTS

    Ever since Christie’s sold a $69.3 million NFT, Beeple’s Everyday: The First 5,000 Days, in March 2021, traditional auction houses have been a megaphone through which various NFT collectors have advertised and promoted their holdings. 

    “I do believe that Sotheby’s and Christies and even Phillips have established a certain price level for NFTs,” says Nanne Dekking, founder and chief executive officer of the blockchain-based digital art registry Artory and a former vice chairman of Sotheby’s. “A price record at Sotheby’s and Christie’s means more for the value of your artwork than at the [NFT marketplace] OpenSea, currently.”

    As the Beeple sale demonstrated, a surefire way to get people to pay attention to your NFT is for it to sell for a record price. (In fact, the purchaser of Everydays was a Singapore-based crypto entrepreneur who had already invested heavily in Beeple’s work.)

    “Our NFT sales over the last year have consistently set new benchmarks and records for NFTs, showcasing how our approach to creating unique and thoughtfully curated sales are set apart from other platforms,” wrote Sotheby’s Fahey in the emailed statement. 

    This arrangement, wherein NFT owners bought and sold work for huge sums that were, in turn, breathlessly reported by international news organizations, including Bloomberg, benefited the owners. It also benefited Christie’s and Sotheby’s, which respectively sold $150 million and $100 million worth of NFTs in 2021. Last Wednesday night in New York, it was set to benefit @0x650d.

    Bad News

    Having already made an estimated $1.3 million from the initial self-reported $7 million purchase of the 104 CryptoPunks, it seems likely that, if the auction had hammered for $10 million, @0x650d would have made a substantial profit in less than a year. Had the lot sold for the high estimate, the profit would have been more than triple @0x650d’s investment.

    To render a potential windfall well above $14 million, in other words, just two people in the audience on Wednesday night had to decide that the 104 CryptoPunks were worth a slight premium over the going rate.

    But the allure of CryptoPunks—namely, that they’re an established, “safe” market—is the very thing that seems to have kept buyers from committing to such a high price.

    For the past 365 days, around 5,000 active wallets have bought or sold CryptoPunks more than 11,600 times, according to Nonfungible. In other words, a relatively small community of people buy and sell the CryptoPunks back and forth, and they’ve established among themselves how much these CryptoPunks are worth. A single sale wouldn’t be likely to change that. 

    “The only reason that would be a significant [auction] is if it would show demand from traditional contemporary art collectors—bringing them into the space,” says Buchanan. Those collectors, he continues, appeared not to have shown up, leaving an audience of passive spectators rather than bidders. “Most of the crowd was a crypto crowd,” he says. “You know, a lot of those folks were not people who were willing to bid on the item. They were just kind of there to see the spectacle.”

    Perhaps for that very reason, the spectacle never happened. This raises the specter of a ceiling for NFT’s popularity and a limit to the gravy train that traditional auction houses have enjoyed for the past 12 months. Perhaps NFTs are not, as their proponents assert, infinitely scalable. Perhaps, as Sotheby’s canceled auction might indicate, they are for a select, devoted few. 

    “This sounds,” says Dekking, “like the traditional art market. Limited demand, people selling to one another, and once in a while there’s an exception with huge prices.”

    Read full story on Bloomberg

    NFTs
    Previous ArticleThree sentenced to prison for role in unlicensed bitcoin exchange
    Next Article ‘Catastrophic Scenario’ Makes Bitcoin the King of Tokens

    Related Posts

    Coinbase Fixing Problem That Halted Payments From US Banks

    October 9, 20221 Min Read

    Binance May Spend Over $1 Billion This Year on Deals, CZ Says

    October 9, 20223 Mins Read

    Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

    May 1, 20224 Mins Read

    Two Senators propose crypto legislation for tax exemption on capital gains

    May 1, 20225 Mins Read

    Wall Street Reluctantly Embraces Crypto

    May 1, 20225 Mins Read

    Warren bill draws outcry over broad terms, but seems unlikely to pass

    March 20, 20225 Mins Read
    Add A Comment

    Leave A Reply Cancel Reply

    Donate to RareHippo Now!
    Latest News

    Coinbase Fixing Problem That Halted Payments From US Banks

    October 9, 2022

    Binance May Spend Over $1 Billion This Year on Deals, CZ Says

    October 9, 2022

    Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

    May 1, 2022

    Two Senators propose crypto legislation for tax exemption on capital gains

    May 1, 2022

    Wall Street Reluctantly Embraces Crypto

    May 1, 2022
    Follow US & Win Prizes
    • Facebook
    • Twitter
    • LinkedIn
    • Pinterest
    Don't Miss
    Investments

    Before you scoff at crypto losses, what’s in your portfolio?

    January 21, 20227 Mins Read

    Cryptocurrencies are popular. If you aren’t a curmudgeonly old fuddy duddy you probably own a…

    GameStop soars on building NFT trading hub, crypto partnerships

    January 7, 2022

    Who Is Bitcoin Creator Satoshi Nakamoto? What We Know—and Don’t Know

    November 28, 2021

    Number of bitcoin whales spikes as sanctions on Russia bite

    March 1, 2022

    Subscribe to Our Newsletter

    Get the latest crypto news right into your email box. No spamming. We hate it too. Only pertinent news you need to know

    Crypto news & Views
    Facebook Twitter Pinterest LinkedIn
    • Home
    • Privacy Policy
    • About Us
    • Donate to RareHippo
    • Get In Touch
    • NewsWire
    © 2023 RareHippo. Powered by 8 Dimensions

    The content of this website is for informational purposes only and is not intended as a substitute for investment or financial advice.

    Type above and press Enter to search. Press Esc to cancel.