Will Luxury Watches See a Crypto-Fuelled Comeback?

Bitcoin’s stratospheric surge may give luxury watch enthusiasts more reason to hope the market’s two-year downturn could be nearing its end.

The oldest and largest cryptocurrency has rocketed to new highs following the November election of Donald Trump, who has promised a crypto-friendly administration. He has already made a number of cabinet picks seen as favourable to the industry, while the once far-fetched idea of the US establishing a strategic Bitcoin reserve, similar to its strategic oil reserve, seems increasingly possible. On Tuesday, Bitcoin’s price broke $108,000 before falling back slightly, marking a peak far beyond the levels it hit during its previous heights in late 2021.

In those days, when crypto was on a high and NFTs were trading at mind-melting prices, luxury brands benefitted from the free spending of crypto-wealthy clientele who were eagerly splashing out on designer status symbols. High-end Swiss timepieces from brands like Rolex, Richard Mille and Patek Philippe were so popular that, when the crypto market crashed, watch marketplaces Hodinkee and Chrono24 felt the shock.

As crypto rallies back, watch brands and marketplaces could see their fortunes rise again, at least in theory. There are complicating factors, though, such as crypto’s inherent volatility and the fact that crypto investors aren’t exactly the same this time around, shaping who gets rich and what they might spend on.

Brands do have some cause for optimism. As Bloomberg columnist Andrea Felsted recently noted, the crypto industry helped prop up luxury spending in 2021, when the crucial Chinese market was locked down for Covid and shoppers pulled back on flashy goods amid Xi Jinping’s crackdown on wealth inequality. The effect was evident in the secondary market for watches, where prices soared as buyers piled in.

Now, with the global luxury market suffering a serious slowdown, especially in China, a boom in crypto wealth should be cause for luxury and watch labels to rejoice. More brands and retailers are already considering accepting crypto payments in response.

The makeup of crypto investors isn’t the same as it once was, however.

“With more hedge funds, pensions, governments, and other institutions entering the market, the real story isn’t Bitcoin’s price — it’s who’s doing the buying,” Nathan McCauley, co-founder and CEO of Anchorage Digital, a crypto-services platform for institutions, posted on X after Bitcoin broke the $100,000 barrier earlier this month.

Institutional investors are much more prevalent in crypto than they used to be. In 2024, for instance, 47 percent of traditional hedge funds invested in digital assets, according to a report by PwC and Alternative Investment Management Association. In 2021, the number was just 21 percent.

Part of the reason for the institutional interest — and crypto’s climb this year — was the SEC’s decision in January to finally authorise Bitcoin-spot ETFs, or exchange-traded funds, which give investors exposure to Bitcoin without having to hold it directly. Greater regulatory clarity also helped, PwC and AIMA said in their report.

That’s not to say crypto investors are entirely different from a few years ago. There are plenty of the same people and personalities in the industry. But there has been a noticeable shift from “shorts and T-shirts to chinos and Patagonia gilets,” to borrow The Economist’s framing of the transition.

The question is how that might shape any luxury spending resulting from a crypto comeback. The newest holders of crypto aren’t necessarily individuals suddenly flush with cash. Many are funds managed by seasoned finance professionals, who enjoy their watches, too, of course, but might not feel the need to run out and buy a new one if Bitcoin keeps going up. Enough of them also prefer inexpensive, kitschy timepieces to have recently drawn the notice of the Wall Street Journal.

“I have nothing to prove to anyone,” Neal W. McDonough, COO of a finance and policy start-up, told the Journal in reference to his $150 Timex featuring an illustration of cartoon character Charlie Brown.

It’s worth noting that, while Bitcoin is on a streak, other crypto assets, from currencies like Ether to NFTs, have seen much more modest increases in value, if any. Additionally, the crypto market is prone to dramatic swings that could wipe out any new wealth in an instant.

The future, in other words, is far from guaranteed. It’s still early for the luxury watch market to pin its hopes on a crypto-fuelled revival. For now, though, brands and retailers are undoubtedly happy to watch Bitcoin keep climbing.

Editor's Note: This story was amended on Dec. 18 to clarify Anchorage Digital's services.