Luxury Brands Still Mad for Crypto


At first glance, the crypto market appears to be in a recession due to the massive drop in the Luna token price on the stablecoin Terra and the overall cryptocurrency price decline. However, renowned luxury brands continue to enter the crypto space.

Balenciaga to support Bitcoin, Ethereum payments

French avant-garde fashion powerhouse Balenciaga will now support cryptocurrency payments.

Balenciaga CEO Cedric Charbit has announced that the company will accept Bitcoin (BTC) and Ethereum (ETH) payments for US consumers. Starting in June, US consumers will be able to purchase Balenciaga products with cryptocurrency in stores on Madison Avenue in New York and Rodeo Drive in Beverly Hills, Los Angeles.

Due to the recent decline in the crypto market, the return on investment of countless individuals and companies exposed to crypto asset classes is declining, but Balenciaga sees the situation from a different angle. The company stressed that it was “thinking of cryptocurrencies in the long term” and that “temporary fluctuations in the value of currencies are nothing new”. Demna Gvasalia, creative director at Balenciaga, posted on Instagram that in the future, Balenciaga plans to accept cryptocurrency payments for website transactions as well.

And recently, Balenciaga launched the non-fungible token (NFT) collection “Cristóbal Balenciaga: To the Moon” on Crypto.com. The NFT collection was created to commemorate Cristóbal Balenciaga, who founded the company in 1919. Balenciaga first actively entered the crypto market in December 2021, when it announced the start of its metaverse business unit.

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Gucci and TAG Heuer already entered the fray

Balenciaga is not alone. Gucci already started accepting 10 major cryptocurrencies in its US flagship stores from late May, with plans to expand crypto payments to its entire store network by the summer.

The Gucci stores that have adopted crypto payments so far are Worcester Street in New York, Rodeo Drive in Los Angeles, Design District in Miami, Phipps Plaza in Atlanta and The Shops at Crystal in Las Vegas. In these stores, shoppers can pay with over 10 cryptocurrencies, including Bitcoin, Ethereum, Wrapped Bitcoin, Bitcoin Cash, Litecoin, Dogecoin and Shiba Inu, as well as 5 stablecoins. In February, Gucci partnered with digital character brand Superplastic to launch the Super Gucci NFT collection.

At the same time, TAG Heuer, a Swiss luxury watch brand owned by Louis Vuitton Moët Hennessy (LVMH), recently partnered with BitPay, a bitcoin payment service provider, to accept several cryptocurrencies as a payment method on its US website.

TAG Heuer accepts a total of 12 cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Dogecoin, Shiba Inu and 5 different stablecoins. It accepts over 100 crypto wallets, including Coinbase, Ledger Wallet, Metamask, Crypto.com, and Gemini Wallet. Shoppers can pay up to $10,000 per transaction in crypto with no minimum spending requirements.

LVMH CEO Frédéric Arnault said that TAG Heuer had been “closely following the evolution of cryptocurrencies since bitcoin started trading”, adding that “as an avant-garde watchmaker with an innovative spirit, we knew that TAG Heuer would adopt what promises to be globally integrated technology in the near future, despite fluctuations”.

Morgan Stanley: Combining luxury brands with crypto offers high growth potential

So, why are luxury brands launching NFT collections and supporting crypto payments as part of their digital transformation? There seems to be a drive for brands to build their own digital fashion ecosystem to diversify profits from the existing revenue model centered on offline product sales.

Major US investment bank Morgan Stanley said that luxury brands could boost their profits by integrating cryptocurrencies. Last November, a research group led by Morgan Stanley analyst Edward Stanley predicted that luxury brands’ NFT business could grow to a $56 billion market by 2030 and that demand could grow “dramatically” thanks to the metaverse.

As a whole, Morgan Stanley expects the NFT market to scale up to $240 billion by 2030 and the digital collectibles market for luxury brands to account for 8% of the total NFT market.

Morgan Stanley estimates that in 2021, high-value NFTs accounted for less than 1% of transaction value. However, Stanley believes that “this is about to change”, adding: “The metaverse will likely take many years to develop; however, NFTs and social gaming present two nearer-term opportunities for luxury brands”.

Currently, there are moves to switch the internet to a Web3-based system. The concept behind Web3 is to move away from the Web2 system, where platforms own data, to a system based on blockchain technology and governance, along with cryptocurrency to hand people sovereignty over their data. In this web3 system, users interact through avatars over which they have full control. Industry experts believe that people will use digital fashion items to express themselves through their avatars, which could come as a great opportunity for fashion brands.

A point in case is the online game platform and creation system Roblox, where 1 in 5 gamers change their avatar every day. “Image is everything in virtual experiences”, the Morgan Stanley analyst noted, “the metaverse will more than likely allow brands to appeal to an even broader audience”.

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