Rolex Daytona resale prices are slipping as cryptocurrency dries out wealth

• Rolex watches are about to erase all the price gains they achieved this year in the resale market.
• The fall follows a steeper crash for stocks and crypto that hit new collectors’ wealth.
• Even with the downturn, experts say Daytonas and other premium watches are still a resilient asset class.

After a surprising two-year run in which used luxury watches increased in value such as stocks, real estate and cryptocurrencies, it seems that the Rolex Daytona is not immune to financial gravity.

Audience Favorites Cosmograph Ref. 116500 has been in a month-long avalanche from the top in mid-March of around $ 48,500, down more than 16% to around $ 39,500 today, according to data from the Watch Charts.

The decline in the relevant referent, along with others in the family, is driving a broader decline in the brand’s performance on the secondary market, which has been down more than 10% in the last three months, per Watch Charts.

An echo chamber overcharged the demand for top models

Similar falls also occur with the other two Holy Grail watches that collectors flocked to during the pandemic: Audemars Piguet Royal Oak and Patek Philippe Nautilus.

“The watch world has become a kind of big echo chamber in some ways over the last couple of years,” WatchCharts founder Charles Tian told Insider.

Ultimately, this has created an extreme interest, not only for the three leading brands, but also very specific individual models that are basically impossible to buy new in store.

The fascination has even given a big boost to other well-established Swiss brands that happen to offer models that are very similar to the top choices.

Still, it seemed that something started at the end of last year that pushed buyers of Daytona, Royal Oak and Nautilus to madness.

Paul Altieri, founder of Bob’s Watches, a leading Rolex retailer, told Insider that the market was particularly hot from October to early May, when prices jumped “it seemed like overnight.”

Since then, Altieri said he has seen a drop in the Daytonas market in his store, albeit somewhat less pronounced than the larger resale market followed by the Watch Charts.

One possible reason Daytonas is doing better for Altieri is that his company does not accept cryptocurrencies, which have been in free fall since April.

The crypto-driven ‘bling boom’ is coming to an end

As Bloomberg columnist Andrea Felsted observed, a “bling boom” bubble appeared in the used watch market that was inflated by the rise in crypto and stocks, citing a Jeffries analysis that cryptocurrency accounted for at least a quarter of growth in luxury sales in the US.

Altieri said his customers tend to spot 401k when considering a purchase, and stocks and bonds have both been beaten in 2022.

A Goldman Sachs analysis found that the classic 60-40 portfolio – generally known for being the most conservative investment strategy balancing equities and bonds – lost 17% in the first six months of this year, the largest decline since 1932.

Meanwhile, even cash in US bank accounts has lost 9.1% of its purchasing power since a year ago, as inflation climbs to its highest level since 1981.

Interestingly, it was the geopolitical uncertainty, the market

volatility

and high inflation in the 70s and 80s, which largely contributed to the emergence of Swiss luxury watches as an alternative investment.

With these goals, the falling quarter for Daytona looks rather less bad, and more like a necessary correction of a market.

“Although the level of growth in the secondary market since 2021 may be unsustainable, we believe that there is a strong value base to be found in luxury watches of” investment grade “,” Morgan Stanley analysts Edouard Aubin and Elena Mariani wrote in a research note.

What makes luxury watches an asset other than securities or crypto is the value base established by enthusiast collectors for decades, Tian said. “These people are not going to go away just because the market is falling.”

A new generation of collectors is now finding a new balance between just enjoying the chimes and expecting a return on investment, he added.

In addition, American households – mostly the richest who like to buy things like luxury watches – are still sitting on huge amounts of surplus savings from pandemic emergency spending.

“That money is still out there,” Altieri said, “and they will find good quality assets to buy. It’s just an insatiable appetite.”

The “bling boom” may be over, but the demand for certain rare and discontinued models continues to exceed supply, and you will still not have any luck finding a Daytona to buy at a retail price.