The $2 Trillion Crypto Markets’ Impact On The High-End Luxury Goods Industry
Gucci now joins a list of high-end luxury consumer brands that are looking to stake their claim in the $2 trillion crypto market, as interest and widespread adoption of digital assets have become increasingly popular across the world.
Following the announcement by Gucci, who will accept Bitcoin, Ethereum, and Litecoin, among other cryptos, market movements remained somewhat unchanged, as the previous day – the Fed’s announced it will increase its base interest rate by 0.50%, the highest of such increase in more than two decades.
Political turmoil, regulatory government intervention, and rampant consumer inflation have caused major cryptos to trade under high-volatile conditions, with BTC down 21% year-to-date, and ETH falling more than 40% from its 52-week high.
Crypto prices have been anything but stable, and the recent Fed hike is looking to make even a bigger impact on the crypto price range, as some experts predict the current economic landscape could soon cause a crypto market crash, as companies and traders rush to purchase digital assets as a way to hedge inflation.
While the crypto market has now interested the likes of high-end luxury clothing brands, to Tesla – it’s perhaps possible to consider how these influences could drive up prices, as demand and adoption become more commonplace in major industries.
Not only do we see crypto being sprinkled across different industries from clothing to Electrical Vehicles (EV), but the entire blockchain industry has captivated multinational brands to jump on the bandwagon as Web 3.0 brings innovation and development to the table.
Crypto is more than a coin
Looking at how far the crypto market has come in the last few years, it’s now clearer than ever before that crypto is more than just a digital coin – it’s become a luxury item.
As consumers build up more wealth through the trade and purchase of digital assets, there will come a point in time when their need to utilize these coins will be more important than trading them on the decentralized market.
The landscape of the crypto industry is completely different, as it encompasses the institutional notion of digital assets. Today, crypto has become a way of life for many, from investors looking to purchase digital assets to hedge inflation, to novice traders using crypto as a way to get onto the DeFi marketplace.
Crypto offers a diversified offering as it allows for transparent and deregulated trading.
Tying this to other industries, we see how some major multinational brands have caught onto the idea of using crypto as a form of payment for goods and services.
For some high-end brands, crypto is more than just a coin, it’s become an indication of wealth and status, innovation, and progressivism. These are the qualities that these high-end brands want to be associated with.
Just how much has crypto changed the luxury goods industry?
Lolli is a platform that can be integrated with eCommerce sites that allow shoppers and customers to earn Bitcoin while they shop, instead of offering loyalty points, customers can now earn crypto.
Some well-known global brands, including Nike, Bloomingdale’s, Sephora, and Ulta, among some 1,000 partners have all collaborated with Lolli.
Consumers are now able to get more than what they bargained for with their crypto. For big-name businesses and high-end luxury brands, it allows them the opportunity to attract lucrative clients who are open to splurging on luxury items.
The luxury brand industry wants to be a part of the movement that blockchain and Web 3.0 have to offer. That’s why we now see names such as Nike, Gucci, and Balenciaga, among others all spending millions to become part of the Web 3.0 movement.
We can’t overlook those brands that are willing to take the plunge into the world of blockchain, but at the same time, we need to consider that there are still a host of high-end brands that are looking to keep their market share well within the real world.
Crypto Created High-End Consumers
From Teslas to watches, we already see high-end brands leaping into the crypto market.
Phillip Plein, a German-based designer, and design house was one of the first major fashion brands to accept crypto as payment back in August 2011 when the price of a Bitcoin went as high as $30.00 only to tumble again back down to $1.00.
Recently, Phillip Plein has also launched a Web 3.0 concept store on the Metaverse, as the company expects more consumers and customers to start using crypto as form of payment.
It wouldn’t be until 2017 when the price of BTC soared to more than $10,000 that consumers and high-end brands started noticing the noise coming from the crypto market.
Today, the average price of BTC is closer to $40,000, with prices swinging as high as $67,000 as we experienced back in November 2021.
In just over 10 years, we now see luxury brands such as Hubolt, Franck Muller and Norgain accept crypto as a form of payment at their stores. Swiss luxury watchmaker, Hubolt went as far as to create a limited edition range of BTC-inspired watches, available to be purchased via Bitcoin – all 201 limited edition watches were sold during its pre-launch announcement.
Then we see a luxury travel agent, Travala.com that now offers travel packages and promotions to high-end clients who prefer to pay in cryptocurrency. Some of their travel deals are customer exclusive and are only available to those travelers that can pay for them using crypto.
Fashion brand, Off-White, which saw more than $7 billion in revenue last year announced in April 2022 that it will now accept crypto as payment in some of its major flagship stores, including London, Milan, and Paris.
In 2021, Sotheby’s Auction House sold Banksy’s “Love is in the Air” (2005) for $12.9 million, a one-of-a-kind sale that was all paid for using cryptocurrency.
We see TJB Super Yacht who at the start of 2021 announced that it will be embracing the crypto-verse, and allow its high-end customers to pay for their yachts with crypto, including BTC and ETH.
Of course, the most well-known in recent years was when Tesla CEO, Elon Musk tweeted that the company will accept BTC as a form of payment for its EVs. Musk would later reverse this announcement, pointing out that the environmental impact Bitcoin mining has does not in the part line up with the company’s sustainability goals.
It wasn’t until late November 2021 that Musk again made a move, tweeting that certain services, goods, and merchandise can now be paid using the popular meme coin, Doge.
Tesla now only accepts Doge and has yet to make any further announcements regarding their acceptance of BTC and other major cryptos as payment.
Bitcoin went from being the same price as an Ebook on Amazon Kindle to becoming the most traded and valuable digital asset in the 21st century. But not only does BTC lead this market, but it’s also helped to establish the playing field for other cryptos to be born, traded, and used within the DeFi market.
Besides the fact that the value of crypto has immensely increased, it’s also become a namesake for high-end luxury brands who are looking to attract a new set of consumers to their stores.
It’s only looking to become more prevalent in the coming years. Insider information from Stephen Pair, CEO at BitPay revealed that transaction volumes related to luxury goods paid for by crypto increased by more than 31% in 2021.
Further insight has indicated that crypto traders and users are more likely to purchase luxury items, with a typical AOV or average order volume being $450.00, while non-crypto users tend to have an AOV of $200.00.
While it makes sense that crypto traders and buyers have more leniency when it comes to the utilization of their crypto – designer brands have quickly caught the traction of these wealthy spenders, and are now bringing their brand and offering directly to these consumers.
The Bottom Line
Cryptocurrencies have gone from digital assets to physical assets that can now be used and transferred between traders and businesses. While the value thereof has immensely increased over the last few years, high-end fashion and consumer goods name brands have caught onto the growing need for crypto utilization.
Instead of investors and traders having to leave their crypto in their digital wallets, luxury brands now offer services and goods on which they can spend their crypto.
From expensive watches to EV-inspired merchandise, to superyachts, the high-end market of luxury goods just became a lot richer, and a lot more decentralized.
This article was originally posted on FX Empire
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