Crypto Assets Market Luxury Indicators: Luxury Watch Trends and Bull-Bear Cycles

Every bull market has people flaunting their wealth. This behavior is reflected not only in on-chain data and wallet screenshots but also in the consumption of luxury goods in the real world. Some people go from being obscure to spending lavishly on luxury watches and showing off on social media. Although this phenomenon may seem trivial, it marks an important shift in market psychology.

Luxury Watches as Veblen Goods

The reason luxury watches have become the preferred choice for flaunting wealth is that they are typical Veblen goods. The characteristic of these goods is that the higher the price, the greater the demand. Buyers value not practicality, but the social status that they represent. Nouveau riche people are eager to showcase their wealth to the world, and luxury watches precisely meet this need.

Characteristics of Lagging Indicators

From the data from 2020 to 2024, there is a clear lag relationship between the luxury watch market and the Crypto Assets market. When Bitcoin first hit an all-time high in 2021, the luxury watch market did not immediately follow suit. It wasn't until the NFT market boomed that the luxury watch market truly flourished. This lag makes the luxury watch market an interesting market top signal.

Data shows that the luxury watch index lags behind Crypto Assets when rising, but almost synchronizes during peaks and crashes. For example, within a year after the crash of the crypto market, the price of a certain well-known brand of watch plummeted by nearly 30%. This phenomenon reflects not the disappearance of demand, but the exhaustion of the core demand (status symbol) that drives price increases.

Alternative Market Sentiment Indicators

Compared to the volatility index of traditional financial markets or the funding rates of contract markets, the luxury goods market provides a more direct sentiment indicator. It not only reflects investor behavior but also their psychological state. When seeing a certain brand of watch priced at twice its retail price or someone flaunting a custom luxury NFT, it often indicates that the Crypto Assets bull market is about to peak.

Current Market Cycle Analysis

Currently, mainstream Crypto Assets such as Bitcoin and Ethereum are approaching historical highs again, and even some well-established altcoins have seen an increase of around 50% in the past month. However, the luxury watch market remains relatively calm, with stable prices, and some models are even experiencing slow sales, with dealers not reporting shortages or high premiums.

This apparent contradiction may actually signal a positive market outlook. The profits accumulated during the current cycle have not yet been widely realized, and recent popular projects have only created a small number of new wealthy individuals. Although discussions about luxury goods have increased within the Crypto Assets community, the enthusiasm is far from that of 2021.

It is worth noting that in the last bull market, the shipment volume of luxury watches only significantly increased in the later stages, which occurred after Bitcoin reached a new historical high for the second time, as people generally felt they had become wealthy at that time.

Characteristics of the New Cycle

In recent months, Bitcoin and luxury watch prices have begun to show a certain degree of correlation, although not entirely synchronized. Unlike in 2021, when crypto assets rose first, followed by the NFT craze, and finally the surge in luxury watch prices. This time, luxury watches and Bitcoin have started to rise almost simultaneously, with their trends being largely synchronized since March.

However, upon closer inspection, some differences can be found. Although Bitcoin is close to its all-time high, the prices of most luxury watch brands are still far below the peak levels of 2022. With a few exceptions among top brands, the overall watch market is trending downward, with some brands even selling for 30-40% below retail prices.

This phenomenon indicates two points: first, the market has not yet entered a frenzy stage; second, most luxury watches are still not ideal investment choices, as their main function is to convey value sentiment rather than preserve value.

Market Outlook

The rise in luxury watch prices does not mean that we have reached the market top, but it does indicate that we have entered the mid-bull market. Typically, people are only willing to make symbolic purchases after they have weathered tough times, which often occurs around two-thirds into the bull market cycle.

Currently, wealth is accumulating, and confidence is recovering, but the real luxury consumption boom has not yet arrived. When the moment of "wealth-driven consumption" truly comes, market participants will be able to clearly feel it even without looking at any charts or indicators.