- EToro is launching an investment fund for new digital art as a first step toward broader expansion of NFT investment services.
- Investing in NFTs will enable the company to diversify its investor base and business partnerships, says U.S. Managing Director Guy Hirsch.
- The process of valuing and evaluating digital art needs to become more sophisticated, but Hirsch said it’s well under way.
The trading platform eToro has launched a $20 million fund to purchase NFTs and support creators. On Thursday, the firm announced the launch at The Bass, a contemporary art museum in Miami.
This fund is part of a new initiative called eToro.art, which supports NFT creators and brands.
The company’s U.S. managing director, Guy Hirsch, said the fund is the beginning of eToro’s NFT strategy, which will eventually allow investors to participate in the emerging economy through a variety of services.
A nonfungible token, NFT represents a real-world object – such as art, music, real estate and beyond – that is not replicable.
“Before, with bitcoin and ether, you had only the likes of Goldman Sachs or similar traditional financial players participating or looking at expanding into crypto,” Hirsch told CNBC. “NFTs are essentially making any and every potential brand a participant in this market.”
eToro’s new initiative included a showcase of its digital art collection, which includes well-known projects, such as the Bored Ape Yacht Club, CryptoPunks and World of Women. To support emerging creators and brands in launching new NFT products this year, eToro plans to commit $10 million.
NFTs can be used in a variety of ways, including digital art. According to Hirsch, eToro plans to provide customers with use cases beyond digital art.
Coca-Cola, McDonald’s, Nike, Gucci, the National Football League, and many others have integrated NFTs into their marketing campaigns in the last few months alone.
“Any brand can hone in on this and create some sort of an NFT that represents an ownership stake in part of the brand,” Hirsch added.
Valuing digital art
The value of digital art has been elusive to investors, who are confused by high sales, such as Beeple’s $69 million piece at Christie’s.
Digital art price discovery and knowing what to buy are still big questions, Hirsch said, but the industry is working on them. Typically, investors use the floor price, or the minimum price you can pay for an item from a collection.
“It needs to be more sophisticated than that,” Hirsch said. “We see new services emerging that will be akin to the appraisal process of traditional art. Within a year or two we’ll have third-party services that will appraise individual pieces and give you an approximate price on what you’re about to buy or what you own in a way that would be agreed on by market participants.”
Hirsch noted that art has been a strong asset class, but only for the very rich. ETORO aims to bring together new artists and new investors in order to help both groups build wealth in this new way.
On OpenSea, the world’s largest marketplace for NFTs, some of the “blue-chip” projects in eToro’s collection fetch a minimum of hundreds of thousands of dollars. However, it believes the company will be able to bring to market the work of many lesser known digital artists at a price point that’s less expensive than that of Bored Ape, a collection that has been popular with celebrities.
“When these artists create a collection or NFT drop, the price on those would be quite low,” Hirsch said. “People would be able to participate, and if the community is strong and if the art is promising, it will appreciate in value, but the entry point would still be accessible to the everyday investor.”
“Some of them will, hopefully, reach the point of Bored Ape status,” he added. “Eventually, like the Bored Apes, that will create a lot of new millionaires, a lot of new wealth for people who didn’t have it before.”