The second-hand luxury watch market is seeing a surge in surplus as the crypto rout depletes the fortunes of its target demographic.
This rout has caused a depression in the prices of certain watches from luxury watchmakers Patek Philippe and Rolex, according to Karlsruhe, Germany-based Chrono24. The company lists more than 500,000 for sale on its website.
Sought-after models like the Rolex Daytona and Patek Nautilus 5711A are seeing a price decline as new secondary market buyers created in the crypto bull market that saw bitcoin ascend to a $69K peak in Nov. 2021 have seen a massive drop in fortunes. Analysts at Jefferies opine that 25% to 30% of high-end sales in the U.S.in 2021 came from crypto wealth. Bitcoin, which touched levels close to $17.5K in June 2022, is now exchanging hands at $23980K at press time, representing a 65% drop from its peak.
Stimulus checks and stock market gains also helped the second-hand market grow.
Prices consolidate into realistic territory
Chrono24 co-CEO Tim Stracke said that the decline in prices brings the popular models into line with prices for similar watches. Prices for some models spiked during the Covid-19 pandemic, with the secondary market notching up annual gains of 10%. The cost of Audemars Piguet’s Royal Oak surged to $107K in April 2022 from $49K a year earlier. At its peak, the normally $35K Nautilus 5711A was selling for $240K. Now it sells for around $190K. However, other brands, such as Cie Financiere Richemont SA, have fared better.
Trading volumes on the platform that links private sellers and buyers increased by 50% in the first half of 2022. Sellers have upped the price of models like Girard-Perregaux Laureato and certain pieces from Breitling and Cartier. Chrono24 has also seen a surge in demand for the Omega Speedmaster range following a partnership with Swatch. Investors sometimes invest in timepieces to store value and hedge against inflation. Breitling recently announced that it was accepting bitcoin for payments in partnership with BitPay.
McKinsey predicts market growth
Chronos24, which has backing from Bernard Arnault, the founder of LVMH, has floated the idea of an initial public offering within the next three years, Stracke told Bloomberg earlier this year. It said that $2.2 billion worth of transactions occurred on its platform last year.
McKinsey predicts that revenue from the secondary market will grow from $29 billion to $32 billion in 2025.
Luxury furnisher RH said that on July 1, 2022, its sales were down 2-5% compared to a year earlier.
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