If you take Wall Street's word for it, the art market is headed for devastation of epic proportions. Guernica big. Dow Jones industrial average big.  

Or bigger. The art world has seen nearly eight years of frenzied fairs, overflowing auction rooms, proliferating galleries, and record-setting prices. But over the past month, as the Dow has lost 19 percent of its value, Sotheby's, the only publicly listed auction house and a proxy for the art market, plummeted 53 percent. And Kathy Fuld, a trustee of the Museum of Modern Art—and wife of Lehman C.E.O. Dick Fuld—is selling off $20 million worth of drawings. Despite a successful Damien Hirst auction last month, the end days seemed nigh.

As if further proof were needed, then came the results for this weekend's contemporary art sales in London; Christie's sold just 55 percent of lots offered on Sunday for a total of $55 million, a bit more than half of its pre-sale low estimate of $99 million. Sotheby's sale on Sunday unloaded 72 percent of lots, bringing in $38 million, also well below expectations. Phillips was by far the worst off, selling only 54 percent of lots for a total of $8.6 million, against a lower-end estimate of $32 million.

Investors had all the reason they needed to pull Sotheby's shares down another 2 percent Monday morning.

The London sales demonstrate that the global credit crunch has begun to put a crimp in demand. Many believe that as the economy continues to slide, the pool of buyers will shrink dramatically, and prices will collapse. The auction houses will get hit by a major drop in revenue, and the value of private collections will plunge. Galleries and dealers will be forced to close down.  

But among all the naysayers, there are some who believe that the worry is significantly overblown, and that this market, at least, is more likely to be in for a soft landing.

For instance, the timing of this weekend's sales—a month after financial markets took a drastic turn for the worse—was uniquely challenging for the auction houses, and led to misleadingly poor results.

Reserves, the minimum price the work is allowed to sell for, were negotiated with the sellers this summer, well before chaos and panic overtook stock markets, points out Kristine Koerber, a research analyst who covers Sotheby's for JMP Securities. The sale estimates would also have been made well in advance of the sales in order for catalogues to be completed, meaning that prices had not yet adjusted to reflect changing market conditions, she says.

On the heels of the London results, sellers should be willing to set lower reserve prices, which will in turn lower opening bids and mean more sales. While a drop in prices is not ideal, it's better than leaving many lots unsold.

Lowell Pettit, founder and director of an eponymous New York-based art advisory firm, stresses that world-class art will soon hit the auction world as collectors are forced to off-load assets.