Economy Discussion

[Gibson.4036]

14 hours ago, Rogue.8235 said:

One of the biggest reasons for volatility after new releases.  There's slightly more to it, but this is the start of the cascade of events.  So, with far less demand for the Gen 3 legendaries (due to cheaper material cost), there is the beginnings of an excess in the supply side of things.  A lot of players held on to their mystic coins and realized they didn't need as much as they did.

The prices begin to fall as demand/supply surpluses begin to actualize into a new equilibrium and you now have the speculation part of the market reacting.  Once the speculators realize that they're holdings are decreasing in value, you have a "Sell Sell Sell!" mentality, which increases the velocity of the downward pricing trend.

Add to this you have returning players coming back to the game, many of which want quick gold injections to get new shiny things in the new expansion.  Although many players on the forums talk about their legendaries, there is still a majority of players that don't pursue legendaries (if someone can find that ArenaNet post talking about statistics concerning legendary items).  An easy way to get gold now is to sell materials hoarding up space, so:

You got it on the nose.  Crashing prices are a mixture of too much stuff (supply) or nobody wants it (demand) mixed with a delta in market activity and an extreme delta in speculation activities.  

As with almost every economic change in macroeconomic environments, a multitude of factors came together to create the changes we witnessed.  The prices will stabilize soon and stay put until there is a new shock to the system.

Next up, the 2008 financial crisis. Learn why EVERYONE and EVERYTHING is at fault to some degree, with idiocy all around.

 

I do appreciate your TED talks. Just the right blend of information and humor.

[Astralporing.1957]

8 hours ago, Linken.6345 said:

If less people are in the game would that not make it more expensive since there is less supply?

Depends which part of the playerbase reduced their playtime/interest. Different group of players produce (and consume) goods at a different rate. As long as the more invested farmers remain, but the more casual (but still interested in bling) players stop playing, the supply:demand ratio will go up.

[Danikat.8537]

15 hours ago, Caliboom.3218 said:

If it weren't for alt account daily login farmers, MCs would be higher in price now.

Wouldn't that also have been true when they were around 2g each? Or are you suggesting a lot of people bought alt accounts in February 2022 when the price dropped?

[Danikat.8537]

2 hours ago, Astralporing.1957 said:

Depends which part of the playerbase reduced their playtime/interest. Different group of players produce (and consume) goods at a different rate. As long as the more invested farmers remain, but the more casual (but still interested in bling) players stop playing, the supply:demand ratio will go up.

I can tell you that if you list Mystic Coins at or just below the current highest selling price they'll still sell quickly, so I don't think a lack of buyers is the problem.

Looking at price tracking sites like GW2Spidy the price of Mystic Coins dropped dramatically at the end of February, right when EoD came out. It was already dropping gradually before that, but on the 28th Feb the average sell price was 1g 81s and had been sitting around that price for over a week, on 5th March it was 1g 22s.

28th February is the day EoD was released, so I really think the majority of the price drop can be explained by players who had been stockpiling them in anticipation of the new legendary weapons increasing demand realising they need relatively few compared to older legendaries and selling some/all their stockpile, either because they didn't need it themselves or because they knew the price would go down.

Also if it was due to an imbalance between farmers and byers I'd expect a similar drop in other valuable items, but I don't see it. Ectoplasm has been going down in price steadily since mid-January but didn't see anything like the drop Mystic Coins did and has always been relatively volatile. Piles of Crystalline Dust have remained fairly stable and Ancient Bones have actually gone up in price since EoD launched.

Edited June 23, 2022 by Danikat.8537

[Zera.9435]

This game's economy was designed with input from an actual economist, so naturally it is quite dynamic with a hydra of factors affecting it. Basically every point being brought up by everyone here is why the economy fluctuates. It's never just one thing.

[Astralporing.1957]

39 minutes ago, Danikat.8537 said:

I can tell you that if you list Mystic Coins at or just below the current highest selling price they'll still sell quickly, so I don't think a lack of buyers is the problem.

Looking at price tracking sites like GW2Spidy the price of Mystic Coins dropped dramatically at the end of February, right when EoD came out. It was already dropping gradually before that, but on the 28th Feb the average sell price was 1g 81s and had been sitting around that price for over a week, on 5th March it was 1g 22s.

28th February is the day EoD was released, so I really think the majority of the price drop can be explained by players who had been stockpiling them in anticipation of the new legendary weapons increasing demand realising they need relatively few compared to older legendaries and selling some/all their stockpile, either because they didn't need it themselves or because they knew the price would go down.

Also if it was due to an imbalance between farmers and byers I'd expect a similar drop in other valuable items, but I don't see it. Ectoplasm has been going down in price steadily since mid-January but didn't see anything like the drop Mystic Coins did and has always been relatively volatile. Piles of Crystalline Dust have remained fairly stable and Ancient Bones have actually gone up in price since EoD launched.

Read my original post. I have specifically separated MCs from the other mats in it.

Yes, the trigger for that drop was the gen3 legendary recipes, but the real reason was the change of approach for the hoarders (or, hoarder-investors). The generation of MCs in game always outstripped supply, it's just that many of the MCs remained in player banks/mat storages and didn't end up being sold. Ionically, that wasn't a real problem - the real problem was that most of the TP-traded MCs were also being hoarded or used as currency in off-TP trades, instead of being consumed. A lot of people considered MCs to be a safe investment, secure in the knowledge that even if there are some small variations in price, ultimately longterm MCs will just continue to go up, and never down. That assumption was first shattered over a year ago, during the (let's not name-and-shame) certain Trade Baron, when millions of buy orders disappeared from TP as a result of several accout of his getting banned. So, when a second major price drop happened, investors started selling in a hurry. And the MC market will never be the same again, because that original assumption of it being a completely safe investment is gone now. It suddenly started being subject to normal market supply/demand conditions, instead of being artificially upheld as an agreed-upon second currency.

If the usual investors didn't change their minds on MCs, that price drop would have been only shortterm, and would have recovered very fast to previous values.

Edited June 23, 2022 by Astralporing.1957

[Turial.1293]

Another large effect is that Teapot (a game partner) has convinced mega-farmers to buy hundreds of accounts for login dailies. Sadly these people don't buy accounts, they buy game keys for cents so Anet makes very little but I'm sure they make some which has been incentive to not tackle it. These login dailies give mystic coins for free, multiply that by ~50 accounts per player and it was inevitable that the MC market would crash. Teapot also encourages afk farmers which is why we have seen an increase in bot activity. He is bad for the economy and bad for the game in general.

[Ashen.2907]

19 hours ago, Dante.1508 said:

Its possibly less people buying stuff because there are less people in game so the prices drop.. I don't want to say dying but the game seems very empty for me lately.. Not just EoD.

Fewer people playing would mean a lower supply as well as lower demand so prices would not necessarily be directly impacted. Increasing supply (which EoD did) while decreasing demand (which EoD did) would result in the price decline described.

[Dante.1508]

On 6/23/2022 at 3:22 PM, Linken.6345 said:

If less people are in the game would that not make it more expensive since there is less supply?

No cause if hardly anyone buys the things the prices go down.