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The 'Crashing Economy' is not real. (Or: Why TF2 trading will be more stable than ever).
By PrettyPrincessKitty FS
Due to recent events involving earbuds, people have been claiming the TF2 economy is crashing.
This guide, similar to my guide about 'the rising key myth', aims to debunk this rumour. In fact, I present an argument for why the economy will be going stronger than ever.
This guide, similar to my guide about 'the rising key myth', aims to debunk this rumour. In fact, I present an argument for why the economy will be going stronger than ever.
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Apr 1, 2015 @ 5:49am
Apr 4, 2015 @ 11:10am
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Guide Index
Overview
Abstract and Introduction
Short overview of the CS:GO economy.
So what would mean the economy is crashing?
So what happened to earbuds?
So where does CS:GO come in?
The economy will stabilise. It will be stronger than it was before.
Fin.
Addendum: 'What if buds rise back?'
Comments
Abstract and Introduction
Recently, Backpack.tf changed all pricing of unusuals from earbuds to keys. This follows a recent sharp drop in the price of earbuds - approximately 7-7.5 keys.
Whilst backpack.tf is in no way a 'bible' or a definitive pricing index, it has a large following of people and influences pricings. At 8 keys per buds, many hats were listed at a literal half of their most recent sales. For instance, a 5 buds hat 3 months ago would be worth about $150, or 80 keys. Now, that same hat would be listed at 5 buds, or $75, or 40 keys.
Because of an arbitrary currency drop, the unusual has lost half its value.
Buds fluctuations are a totally normal occurence - and normally, this would be taken on the nose by a trader. What is 5 keys in an 80 key unusual? Not much at all. But what is 40 keys in an 80 key unusual? That is a totally different outcome.
Many people took this as a sign the market was crashing. Now, as many people have entirely abandoned earbuds as a currency, it seems that the market is 'crashing' again.
I will provide an argument as to why this has been a long time coming, as well as why it is a good thing for TF2 trading.
I'm going to be using the basic idea from my 'Rising Key Myth Explained' guide - which many people seemed to like - that keys are a stable currency and it is refined deflating.
I'll also be drawing comparisons to the CS:GO economy, and I'll add a basic overview of CS:GO trading below.
The rest of the guide will be as follows:
Disclaimers:
I am in no way affiliated with backpack.tf, trade.tf, or any other pricing sites.
I am in no way affiliated with Valve.
I am not an economist.
The information is entirely my own opinion. Do not take it as fact.
I will be adding a section explaining what I would consider an economy 'crash'.
Whilst backpack.tf is in no way a 'bible' or a definitive pricing index, it has a large following of people and influences pricings. At 8 keys per buds, many hats were listed at a literal half of their most recent sales. For instance, a 5 buds hat 3 months ago would be worth about $150, or 80 keys. Now, that same hat would be listed at 5 buds, or $75, or 40 keys.
Because of an arbitrary currency drop, the unusual has lost half its value.
Buds fluctuations are a totally normal occurence - and normally, this would be taken on the nose by a trader. What is 5 keys in an 80 key unusual? Not much at all. But what is 40 keys in an 80 key unusual? That is a totally different outcome.
Many people took this as a sign the market was crashing. Now, as many people have entirely abandoned earbuds as a currency, it seems that the market is 'crashing' again.
I will provide an argument as to why this has been a long time coming, as well as why it is a good thing for TF2 trading.
I'm going to be using the basic idea from my 'Rising Key Myth Explained' guide - which many people seemed to like - that keys are a stable currency and it is refined deflating.
I'll also be drawing comparisons to the CS:GO economy, and I'll add a basic overview of CS:GO trading below.
The rest of the guide will be as follows:
- Why buds have crashed.
- Why the market is not crashing.
- Why the economy is going to be stronger than ever.
Disclaimers:
I am in no way affiliated with backpack.tf, trade.tf, or any other pricing sites.
I am in no way affiliated with Valve.
I am not an economist.
The information is entirely my own opinion. Do not take it as fact.
I will be adding a section explaining what I would consider an economy 'crash'.
Short overview of the CS:GO economy.
Note: I am not an experienced CS:GO trader. Take everything with a pinch of salt. It is intended to give a basis for comparison.
In CS:GO, weapon skins and crates are dropped at the ends of matches, similar to weapon and hat drops in TF2. However, these are somewhat rarer and can value from 3 cents up to many hundreds of dollars depending on condition.
The 'unusuals' of the CS:GO world are knives - gotten from opening crates. Some knives are StatTrak - that is, counting kills - and these are worth substantially more than their regular equivalent knives.
CS:GO has only 1 centralised currency - keys - and a number of arbitrary skins sometimes traded in place of keys, especially for larger trades - these tend to be various guns with the 'Asiimov' pattern. This is in contrast to TF2's 3 centralised currencies - refined, keys, and earbuds - and some other items often traded, like Max heads or HOUWARs.
The main difference is that everything in CS:GO is priced and sold for keys. it is incredibly rare to see an item priced for '5 Asiimov FT AWPs'. Knives can vary from 15 to 1500 (or more) keys. Everything is based around the key - and the key, like TF2, has a financial backing (the store/market) and is almost entirely stable.
In CS:GO, weapon skins and crates are dropped at the ends of matches, similar to weapon and hat drops in TF2. However, these are somewhat rarer and can value from 3 cents up to many hundreds of dollars depending on condition.
The 'unusuals' of the CS:GO world are knives - gotten from opening crates. Some knives are StatTrak - that is, counting kills - and these are worth substantially more than their regular equivalent knives.
CS:GO has only 1 centralised currency - keys - and a number of arbitrary skins sometimes traded in place of keys, especially for larger trades - these tend to be various guns with the 'Asiimov' pattern. This is in contrast to TF2's 3 centralised currencies - refined, keys, and earbuds - and some other items often traded, like Max heads or HOUWARs.
The main difference is that everything in CS:GO is priced and sold for keys. it is incredibly rare to see an item priced for '5 Asiimov FT AWPs'. Knives can vary from 15 to 1500 (or more) keys. Everything is based around the key - and the key, like TF2, has a financial backing (the store/market) and is almost entirely stable.
So what would mean the economy is crashing?
I would take a crashing, or crashed, economy to be:
Everything is worthless.
Everything is being sold off quickly as everyone panics and leaves, causing more panic.
Hyperinflation of currency.
The final point is, arguably, already happening - keys are now 19 refined each. But, as I've said in my previous guide - it's not that surprising. Certainly not on a hyperinflation level.
But let's see.
Is everything worthless?
No. Recent trends on various craftable items have been going up. A number of 2 ref hats are now selling at 2.66-3. Some 1.33 hats have been up to 1.66 or 2. Similarly, it seems nearly all genuine hats have risen by 10, 20, even 30%. This is most likely just a late counteraction to the decline of refined.
Is everything being sold off quickly?
Yes and no. Yes in that many people are leaving the game, or at least the trading scene. People are always leaving, but a larger proportion are from having traded for a long time, or personal reasons. It is not a mass quit from the economy. There was a minor panic spiral with earbuds. However, if this was a sign of a crashing economy, then unusuals would've followed suit. As we've seen, they very quickly switched to being priced in keys. Is this a sign of a crash? No.
So this shows that the economy, whilst it was not healthy, was not crashing.
Everything is worthless.
Everything is being sold off quickly as everyone panics and leaves, causing more panic.
Hyperinflation of currency.
The final point is, arguably, already happening - keys are now 19 refined each. But, as I've said in my previous guide - it's not that surprising. Certainly not on a hyperinflation level.
But let's see.
Is everything worthless?
No. Recent trends on various craftable items have been going up. A number of 2 ref hats are now selling at 2.66-3. Some 1.33 hats have been up to 1.66 or 2. Similarly, it seems nearly all genuine hats have risen by 10, 20, even 30%. This is most likely just a late counteraction to the decline of refined.
Is everything being sold off quickly?
Yes and no. Yes in that many people are leaving the game, or at least the trading scene. People are always leaving, but a larger proportion are from having traded for a long time, or personal reasons. It is not a mass quit from the economy. There was a minor panic spiral with earbuds. However, if this was a sign of a crashing economy, then unusuals would've followed suit. As we've seen, they very quickly switched to being priced in keys. Is this a sign of a crash? No.
So this shows that the economy, whilst it was not healthy, was not crashing.
So what happened to earbuds?
Using the pricing graph of earbuds via backpack.tf,[backpack.tf] there has been an evident downard trend of the price of earbuds. October 2012, buds were worth 28 keys. June, 2014 - 16 keys. April, 2015? Around 7-8 keys.
Of course there are fluctuations - be it Halloween, Christmas, or other reasons. But the overall trend is to a less valuable earbuds.
The sole reason is that earbuds never had a reason to be so high past people wanting them to be.
Back in 2011, there was no steam trade. All trades had to be done through the TF2 trading window, which had a maximum of 8 items. Earbuds were worth 9-10 keys, and even the cheapest unusuals were worth 1.1-1.3 buds. There was no way to buy an unusual for keys only. Thus, earbuds were used. The price was entirely based off people buying and selling at this price range.
Then, buds rose. The likely reason is because of an influx of new traders, so demand rose. But then, steam trade became a thing. Suddenly the entire purpose of buds was moot. Why did nobody trade unusuals for keys? It wasn't the done thing. Unusuals were bought and sold for buds, and were entirely tied to buds by tradition.
The reason for the drop in earbuds is an influx of new unusuals and people starting to lose interest in them. The first point is about when Valve started introducing new effects - suddenly we went from maybe a dozen effects to 2 dozen, or more. Unusuals were everywhere. As such, supply increased, the price dropped, and buds, being tied to unusuals, fell too.
The second point is that people started to realise that there was nothing to keep buds up. There was no gold bullion sitting in the bank, with the government of earbuds propping them up. People liked keys - you could buy lots of stuff for a key, whereas with buds you're stuck to unusuals or other high priced items.
Fast forward to recently. Unusuals are primarily stable. Buds have sat at 14-15 keys for a long time, unusuals sit at a bottom price of 10 keys or so. Now, it's the norm for unusuals to be traded for keys..just not as common as buds.
Then buds were available on the steam market. The huge number of people who had no interest in trading and had buds sitting around from the original promo could offload them. Your average Joe trader who did not care about the cash scene could trade them. Suddenly, buds weren't a special item - everyone could get them with ease. And that was the start.
People could get buds for cheap, so people sold buds for cheap. People saw them selling for cheap, so they sold cheaper. The panic spiral started - as soon as people saw backpack.tf note that the current price was 12 keys, people would quickly try and offload for 11.5. 3 days later, the same happens.
With nothing to back up buds, the death spiral continued.
And suddenly, buds are 8 keys. That unusual, as stated, may have dropped 50%. Is full price possible? Very doubtful. Are people going to take that? Again, no. It was a catalyst for people to abandon buds and move to keys.
Of course there are fluctuations - be it Halloween, Christmas, or other reasons. But the overall trend is to a less valuable earbuds.
The sole reason is that earbuds never had a reason to be so high past people wanting them to be.
Back in 2011, there was no steam trade. All trades had to be done through the TF2 trading window, which had a maximum of 8 items. Earbuds were worth 9-10 keys, and even the cheapest unusuals were worth 1.1-1.3 buds. There was no way to buy an unusual for keys only. Thus, earbuds were used. The price was entirely based off people buying and selling at this price range.
Then, buds rose. The likely reason is because of an influx of new traders, so demand rose. But then, steam trade became a thing. Suddenly the entire purpose of buds was moot. Why did nobody trade unusuals for keys? It wasn't the done thing. Unusuals were bought and sold for buds, and were entirely tied to buds by tradition.
The reason for the drop in earbuds is an influx of new unusuals and people starting to lose interest in them. The first point is about when Valve started introducing new effects - suddenly we went from maybe a dozen effects to 2 dozen, or more. Unusuals were everywhere. As such, supply increased, the price dropped, and buds, being tied to unusuals, fell too.
The second point is that people started to realise that there was nothing to keep buds up. There was no gold bullion sitting in the bank, with the government of earbuds propping them up. People liked keys - you could buy lots of stuff for a key, whereas with buds you're stuck to unusuals or other high priced items.
Fast forward to recently. Unusuals are primarily stable. Buds have sat at 14-15 keys for a long time, unusuals sit at a bottom price of 10 keys or so. Now, it's the norm for unusuals to be traded for keys..just not as common as buds.
Then buds were available on the steam market. The huge number of people who had no interest in trading and had buds sitting around from the original promo could offload them. Your average Joe trader who did not care about the cash scene could trade them. Suddenly, buds weren't a special item - everyone could get them with ease. And that was the start.
People could get buds for cheap, so people sold buds for cheap. People saw them selling for cheap, so they sold cheaper. The panic spiral started - as soon as people saw backpack.tf note that the current price was 12 keys, people would quickly try and offload for 11.5. 3 days later, the same happens.
With nothing to back up buds, the death spiral continued.
And suddenly, buds are 8 keys. That unusual, as stated, may have dropped 50%. Is full price possible? Very doubtful. Are people going to take that? Again, no. It was a catalyst for people to abandon buds and move to keys.
So where does CS:GO come in?
CS:GO is an entirely key-based economy. There is no wild fluctuation. Knives stay at around the same price. Maybe dropping $5 here, maybe rising $20 here. There's no reason for them to drop 50%.
And if the main pricing site has abandoned buds, following many traders having abandoned buds themselves prior , it's fair to say that TF2 is, or at least will be, a key-driven economy . Like CS:GO.
Why is this good? Keys are stable. They have financial backing. They are not going to lose value.
Does it mean unusuals are never going to shift in price? No, not at all! But what it does show is that unless there is a major change (a hat being turned into a misc, or a hat being discontinued) then unusuals can be expected to keep most of their value.
This idea of stability leads onto my next, and major, point.
And if the main pricing site has abandoned buds, following many traders having abandoned buds themselves prior , it's fair to say that TF2 is, or at least will be, a key-driven economy . Like CS:GO.
Why is this good? Keys are stable. They have financial backing. They are not going to lose value.
Does it mean unusuals are never going to shift in price? No, not at all! But what it does show is that unless there is a major change (a hat being turned into a misc, or a hat being discontinued) then unusuals can be expected to keep most of their value.
This idea of stability leads onto my next, and major, point.
The economy will stabilise. It will be stronger than it was before.
I'd like to highlight my use of will , not is. Whilst I do very much agree that backpack.tf is a guide, not a bible, there are a large proportion of traders who follow it blindly. If they do something, many people will take it as fact.
With the shift from unusuals priced in earbuds to keys, many unusuals have jumped in price significantly. For instance, a nuts and bolts hazmat headcase has gone from 7 to 18 buds. The burning Team Captain has gone from 550 to 820. Hell, a cloudy moon geisha boy has gone from around 5 to 10 buds. Or another example - a time warp impaler has jumped from 12 buds to 32.5 .
Of course, it's fairly wrong for me to claim buds are stupid and needed to be abandoned a long while ago and then show the jumps in earbuds. The thing is that people will continue to think in buds for a long while . Whether or not they are abandoned, they have value in the minds of people. Why is the burning TC worth so much more than, for instance, a burning Crone's or Law, hats which are all-class and arguably better looking? It is known for being 'the' best hat in TF2, for tradition.
Some of these prices have been from 5 or 6 months ago. That's a doubling in price, roughly, for some unusuals. Are people realistically going to go 'oh well, I supppose I'll pay double for this hat'? In most cases, no. People will take this time to 'quicksell' their hats. Prices will drop. Eventually, a happy medium between blind traders listing at 300 keys and people only wanting to pay 220 will arise. Then, I feel, is the time that the economy is stable. Will it take some time? Absolutely. I guess it'll be at least 2 weeks or so before things start to stabilise. Then a couple of months before it becomes a norm.
My second point is that when arbitrary currency is dropped from major circulation - that is, most people move to keys - all of TF2 will be more unified. There won't be any more need for 'well, I want to buy a burning hat, so I need to turn my keys into earbuds' or 'I want to buy some hats, so I need to turn my earbuds into keys'.
Everything can be done in keys.
Everything is no longer tied to arbitrary valuing. People don't need to reconsider 'well, I bought this hat for 6 buds when buds were 15 keys, but now buds are 6 keys, so how much of a loss do I need to take to sell this?'. Hats are now worth a value in hats, not worth a value in buds.
With the shift from unusuals priced in earbuds to keys, many unusuals have jumped in price significantly. For instance, a nuts and bolts hazmat headcase has gone from 7 to 18 buds. The burning Team Captain has gone from 550 to 820. Hell, a cloudy moon geisha boy has gone from around 5 to 10 buds. Or another example - a time warp impaler has jumped from 12 buds to 32.5 .
Of course, it's fairly wrong for me to claim buds are stupid and needed to be abandoned a long while ago and then show the jumps in earbuds. The thing is that people will continue to think in buds for a long while . Whether or not they are abandoned, they have value in the minds of people. Why is the burning TC worth so much more than, for instance, a burning Crone's or Law, hats which are all-class and arguably better looking? It is known for being 'the' best hat in TF2, for tradition.
Some of these prices have been from 5 or 6 months ago. That's a doubling in price, roughly, for some unusuals. Are people realistically going to go 'oh well, I supppose I'll pay double for this hat'? In most cases, no. People will take this time to 'quicksell' their hats. Prices will drop. Eventually, a happy medium between blind traders listing at 300 keys and people only wanting to pay 220 will arise. Then, I feel, is the time that the economy is stable. Will it take some time? Absolutely. I guess it'll be at least 2 weeks or so before things start to stabilise. Then a couple of months before it becomes a norm.
My second point is that when arbitrary currency is dropped from major circulation - that is, most people move to keys - all of TF2 will be more unified. There won't be any more need for 'well, I want to buy a burning hat, so I need to turn my keys into earbuds' or 'I want to buy some hats, so I need to turn my earbuds into keys'.
Everything can be done in keys.
Everything is no longer tied to arbitrary valuing. People don't need to reconsider 'well, I bought this hat for 6 buds when buds were 15 keys, but now buds are 6 keys, so how much of a loss do I need to take to sell this?'. Hats are now worth a value in hats, not worth a value in buds.
Fin.
tl;dr
The CS:GO economy is strong - it has no arbitrary ties.
Earbuds dropped because there was nothing holding them up in value.
Recently a death spiral of earbuds dropped occured, primarily from their listing on the SCM.
De-linking unusuals from earbuds allows unusuals to retain their value independently.
It will take time for the economy to become stable, as the gap between buyers and sellers is currently huge.
Thanks for reading. I feel this may be more...controversial than my key guide. I'm always open to appending or changing if people want to provide input.
The CS:GO economy is strong - it has no arbitrary ties.
Earbuds dropped because there was nothing holding them up in value.
Recently a death spiral of earbuds dropped occured, primarily from their listing on the SCM.
De-linking unusuals from earbuds allows unusuals to retain their value independently.
It will take time for the economy to become stable, as the gap between buyers and sellers is currently huge.
Thanks for reading. I feel this may be more...controversial than my key guide. I'm always open to appending or changing if people want to provide input.
Addendum: 'What if buds rise back?'
I'm adding this because, currently, buds are surging back. Again, people see others buying and this causes them to buy, which means the price rises, so people buy to ride, etc etc etc.
Everything listed here is still valid . If buds rise, will people use them? Absolutely.
But people, at least a majority, have now seen exactly what a reliance on buds could cause. I believe, as an opinion, that the majority of people will continue to work with keys and unusuals will be continued to be valued in keys.
Everything listed here is still valid . If buds rise, will people use them? Absolutely.
But people, at least a majority, have now seen exactly what a reliance on buds could cause. I believe, as an opinion, that the majority of people will continue to work with keys and unusuals will be continued to be valued in keys.
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