LONDON: Reports revealed last week that the prices of some of the most sought-after luxury watches have plunged in second-hand markets due to a collapse in cryptocurrency value.
The second-hand watches market, which includes popular brands like Rolex and Philippe Patek, is the first luxury goods sector to witness the impact of cryptocurrency collapse, and it is unlikely to be the last.
Higher interest rates, sky-rocketing inflation and the absence of Chinese and Russian buyers due to lockdowns and the conflict in Ukraine have brought the demand down, causing prices to drop by an estimated 25 percent.
Popular among wealthy Arab, Russian and Chinese clients, the market for luxury watches has not always been on the decline.
In fact, soaring global demands for second-hand luxury goods, including handbags, designer sneakers and fine jewelry, were previously bolstered by a mix of cryptocurrency and stock-market gains, stimulus cash and speculation.
Rampant inflation and the war in Ukraine also contributed to their appeal, as buyers sought to invest in alternative assets, including non-fungible tokens and luxury watches.
In addition, a new generation of buyers driven by ethical consumerism entered the market for the first time, which further contributed to the spike in demand for some of the most well-known models like the Rolex Daytona, Patek Philippe Nautilus and Audemars Piguet Royal Oak.
Today, the appetite for genuinely rare pieces, as opposed to those that are perceived as scarce, remains high, which benefits Arab collectors whose demand for these rare timepieces makes the items desirable and highly collectible.
However, buyers are becoming more cautious, and the market for second-hand luxury watches is taking a hit, which could see Arab watch collectors and new buyers shift toward NFTs.
So far, the demand for new watches is stable and the primary markets are holding strong. Recent events in the secondary market for luxury watches, however, are a stark reminder that the boom may not last.