The Groove 242 - The Totally Predictable Art Market Bust
Welcome to the 242nd issue of The Groove.
I am Maria Brito, an art advisor, curator, and author based in New York City.
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The Totally Predictable Art Market Bust
Christie's headquarters in New York in 2022. This was their best year ever in which they sold $8.4 billion in global art and luxury goods. (c) Richard B. Levine.
In 2018, I told someone who had just opened a gallery that the proliferation of artists and spaces didn’t match the number of collectors ready to buy. It wasn’t meant to be discouraging. It was an observation grounded in experience. At that time, I had been running my advisory business for nearly a decade (I am now in my 16th year) and was receiving 15–20 exhibition preview emails a week. During fair season, that number could hit 50 a day. It was obvious that the market was being flooded not only with work, but with expectation.
What’s happening now isn’t sudden or surprising. It’s the result of too much noise and not enough discernment. It’s not a crash. It’s a correction. And if more people in the art world understood economic history, or even just read Charles Kindleberger, fewer would be panicking.
Kindleberger, who was the lead architect behind the Marshall Plan between 1945-1947 and MIT’s Professor of International Economics, gave us in his 1978 book Manias, Panics, and Crashes: A History of Financial Crises, the classic five-stage cycle of speculative bubbles: displacement, euphoria, mania, distress, and panic.
A shift triggers attention. Money floods in. Prices surge. Fundamentals get ignored. Eventually, momentum slows. Then comes the reckoning, not because value disappears, but because the illusion of infinite demand finally breaks.
That’s where we are now. And if you’re watching closely, it’s not the end, it’s the beginning of something healthier.
The Mania Before the Malaise
By the time COVID hit in 2020, the art market was already inflated. Interest rates had been hovering under 2%. The U.S. government pumped stimulus checks into the economy. Crypto fortunes multiplied. Art became the perfect speculative vessel: portable, unregulated, status-laden. The game wasn’t about loving what you bought. It was about flipping fast.
A whole new class of “collectors” entered the market. The speculator bros didn’t care about context, medium, or career arcs, they cared about upside. Demand created scarcity, and scarcity inflated price. It was unsustainable, but it was intoxicating.
In 2022, the public auction sector pulled in nearly $27 billion, while private sales through galleries and dealers reached $37.2 billion. But these numbers didn’t reflect a stable or measured market; they captured the peak of euphoria and mania. What was driving those figures wasn’t thoughtful collecting or long-term conviction; it was velocity, speculation, and a race to get in and out before the tide turned.
What’s harder to understand is how galleries, who are, by all intents and purposes, business owners and operators (even if they romanticize their role as something closer to a museum and imagine themselves the adults in the room), failed to recognize this moment as an anomaly. They opened more locations. They added more artists. They treated speculative demand as if it were organic growth. They raised primary prices for artists in their twenties into the mid six figures. But none of it was built to last. And now, many of the same people who overbuilt are claiming the system is broken.
Kindleberger in the Art Market: The Structural Flaws Are Exposed
One of Kindleberger’s most enduring insights is that the architecture of a system always gets tested after a bubble bursts. It’s not the flashy outliers that collapse first, it’s the over-leveraged middle. That’s exactly what we’re seeing now.
Galleries that scaled too fast, or whose models depended on speculation, are in trouble. So too is the dealer who opened a third location without understanding operational cost. Or the gallery that built Basel villas instead of balance sheets.
But these collapses are not a sign that the whole market is failing. They’re signs that it’s tightening. And for the people who built wisely, worked steadily, and avoided the trap of hype economics, this is survivable. Even strategic.
What’s being flushed is the noise. What’s left is the structure. And for serious collectors, this is a moment of rare clarity.
What Real Demand Looks Like
Here’s what that clarity looks like in practice: Since September 1st, I’ve placed a dozen works with clients.
Two are especially worth noting. They were small to medium-sized paintings, each under 40 inches, priced between $20,000 and $30,000. Neither was discounted because so many collectors were vying for them. The galleries, each with just two thoughtfully run locations, are known for their discerning programs and long-term commitments to their artists. The artists are in their forties and fifties, with careers spanning over two decades. Their markets weren’t built on spectacle or trend. They were built on consistency, substance, and evolution. And the demand was real. Not frenzied, but focused. Not inflated, but earned.
The idea that no one is buying is false. People are buying, but they’re buying differently. More carefully. With more questions and fewer assumptions. That’s not a sign of collapse. That’s a return to good judgment.
Kindleberger didn’t write about the art world. But he understood its psychology. In every mania, belief detaches from reality. And in every correction, belief becomes more valuable than ever, because the buyers who remain are the ones who actually understand what they’re doing.
This Was Always Coming, and It Will Come Again
The art market is cyclical. It always has been. From the Japanese crash of the early 1990s, to the post-2008 wipeout, to the 2016 market softening. The crash happens, the market tightens, and then it evolves.
The same will happen now. Some prices won’t bounce back. Some artists won’t stay visible. But the ones who were always building and not chasing will emerge stronger. And the collectors who buy now - without the noise, without the frenzy - are making better decisions than they could have during the peak.
In Kindleberger’s view, manias are inevitable. So are corrections. The question isn’t how to avoid them. It’s how to see them clearly and respond with clarity, not fear.
The Art Market Isn’t in Crisis. It’s in Clarity
This isn’t the end. It’s the return of discernment.
The frenzy is over. The pressure to buy fast, to buy what everyone else is buying, to mistake visibility for value, that’s what’s receding.
What’s re-entering the room is patience. Depth. Taste. And a renewed understanding that collecting is not about keeping pace, it’s about building something that will still matter when the trends fade.
If you’re collecting now, you’re not late, you’re early.
This is the moment where serious collections are shaped.