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Nyota Sol
Center for Advanced Studies
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Posted - 2009.08.19 11:51:00 -
[1]
Some of us just love a good doom & gloom story.
I admit that i do, but when it has come to PLEX I have tried to be optimistic and even invested substantially into them. However, with the recent devblog and supply-side data, I'm afraid my doom & gloom side has taken over.
Looking at the red & blue lines from April/May, we can see how at the start of May the amount of plex used for subs was higher than the number created (i.e. red higher than blue). That put the sales prices in the hands of those with the diminishing stockpiles (notice the yellow line dips right there).
Looking at the blue line in June/July, we can see that people continued to create plex with real cash at an increasing rate. However, plex use flattened (red). This caused a steady increase in stockpiles.
Looking generally at the yellow line, we can see several periods where stockpiles increased significantly. In Feb, there was a similar pattern as in May, but there wasn't a massive price spike.
So what happened?
What seems to be different about May/June is that massive speculation took place, and with the 400m prices it seems that the general interest in collecting plex as trade items became popular.
The plex stockpiles doubled in June/July, ending at over 16,000 plex sitting around collecting dust at the start of this month. Even with flat usage demand, the prices have remained stable. We can see that plex usage nose dived in June, indicating a decoupling of the price from the actual usage.
Why?
Why haven't prices dropped below 300m?
I believe that people who invested in plex with ISK have a natural desire to hold until the prices get them a reasonable return. Since prices are stable, they are holding out in good faith.
Similarly, I believe that there could be a significant number of plex created with cash whereby the owners are holding tight in hopes for a bit more out of them. These people will become increasingly interested in cashing out, especially if prices get volatile again.
Finally, we have a number of people who may have invested at 300-310m with the expectation of using the plex later for subs. Perhaps they perceived that prices would go up again and thus bought what they could the moment prices landed back down.
What portions of the over 16,000 plex are held by each type? How many of them will start selling at under 300m if the current floor should collapse?
I don't see any way for plex prices to rebound unless the usage rate jumped from 800 to something like 1000 in Aug/Sept. I don't see the usage rate increasing significantly unless prices dropped to 225m-250m.
I see a plexapocalype on the horizon.
Volume increasing. Prices flat. Supply increasing exponentially.
Demand flat.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.19 11:55:00 -
[2]
Edited by: Nyota Sol on 19/08/2009 12:04:22
One further question is... what could 200-300 billion in sudden disposable cash do to the wider markets?
That's the rough value of the "excess" plex stockpiles.
And one further thought. I think CCP's open push for people to buy plex makes sense from a simple marketing and business model point of view. However, I assume they realize the potential implications of letting the community know about this massive supply-side build up. They want more people to buy plex and the more i've thought about this, the more i suspect this recent devblog was published with an interest in seeing much lower plex prices. I personally would welcome 225m plexes and i suspect CCP would too.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.19 13:49:00 -
[3]
Thanks for the tip on the "support" concept.
I guess I am saying that the support level is going to crack and likely reset at a much lower price whereby the plex usage rate will actually increase. The current support level does not appear to be based on real plex use/demand.
It's possible that all 10,000 excess plex will be sold at 300m or higher, but i really don't see how this situation can be maintained.
Originally by: quygen Spend all on cheap Trit around the universe and relist at higher price?
I approve of this plan!
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.19 15:20:00 -
[4]
Let's factor in that CCP crushed some 6000 accounts last month, which could help explain that dip in plex usage (just a hunch).
Originally by: Midas Man
since the blog stating the massive stock piles of plex's available the prices are falling a few mil a day as more and more people realise the folly of investing more into them.
A crash is inevitable and Im hoping for the 150 mil per plex, 300 mil per 60 GTC. Bring back the old price of game time.
While 150m is a nice thought, I imagine another "support" floor in the low 200s because i think a LOT of people would consider that a very reasonable price.
From my limited observations of recent trading, I suspect there are quite a lot of people heavily invested in plex that are quickly buying out sell orders in the 290-305m range. However, while that could be a successful strategy of maintaining support in the 300m levels, I don't see how it can be sustained in all the major trade regions over many weeks.
There's just too many plex out there burning pockets, imo.
Likewise, just as people might rally to maintain 300m prices, we could potentially see people organizing to drop them below 300m in some regions. The moment a significant number of the people holding these 16,000 plex see sub-300m prices becoming widespread, we're likely to see panic and competition to dump them.
While i personally would like to see cheaper plex, this "plexapocalypse" could have nasty ripple effects on the markets. A lot of that raw cash could go right into more speculation... like billions of trit.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.19 16:53:00 -
[5]
Edited by: Nyota Sol on 19/08/2009 16:54:26
Originally by: Midas Man
It doesn't look good 16,000 plex gathering dust is alot of downward pressure. If CCP's figures in the plex blog are correct 8k are used but 10k are being created over a 7 day period at the end of july. If that trend doesn't stop and panic starts then we have the makings of a serious crash. Even with no panic if 2k more per week keep getting created (people buying plex generally want the isk now) we could see big reductions in price (which in itself will slow the creation of plex's) but its certainly looking bleak for those with stock of them.
That's my question, about the nature of the downward pressure. And let's be clear, there is no sign of upwards pressure on the horizon beyond existing investors wanting to maintain the current floor at 300m.
It may not hit panic levels for a while, even if prices broke 300m in the coming weeks. I dont think a panic hits until the general plex market permanently seems to be under 305m.
I think plex started being created at increasing rates based on long-term investment interests and not for quick cash turn-around or sub use. I suspect that the moment the sub-300m buy orders come to dominate in a few regions, we're going to see many smart investors bailing quickly.
However, I suspect a lot of the heavily invested people/groups may hold out for a while. Maybe they will see the writing on the wall once prices keep heading downwards towards 250-275m. I think the panic hits once everybody fully understands the prices are not going to ever come back up to 350m range and thus profit for investors.
Of course, this all assumes we're not seeing and going to see a major increase in plex usage.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.19 18:30:00 -
[6]
Edited by: Nyota Sol on 19/08/2009 18:30:39
Originally by: KaarBaak Consider also: CCP is proud of the impact 'safe' PLEX conversion of RM->ISK has on the RMT market vs non-sanctioned ISK sellers. If the sell price of purchased ETCs gets too low, what is the risk of players returning to those ISK sellers?
<don tin-foil hat>
Perhaps it's those ISK sellers that are working on a plan to crash the market in order to drive ISK purchasers to the non-sanctioned ISK sellers? After all, there's more money in stolen credit cards and accounts than there is in PLEX resale.
</tin-foil hat>
KB
wat
First of all, CCP has strong interest in an increased rate of PLEX creation, regardless of the ISK value. Let's be clear on that. I'm sure they understand the theoretical risk of people being driven into illegal black markets, but I think the real fuel here is demand for subs not RMT.
Being able to safely "buy" ISK is very valuable even if it was at a 200m swap price. And i think we'd all agree that if prices were in the 200-250m range, we'd see a significant increase in the total volume of PLEX being utilized for subscriptions.
As for this silly notion of ISK sellers conspiring to crash the market to drive people out of PLEX creation, I don't know where to begin. These are the same fools that use capslock spam as marketing. I'd wager that most of those businesses make their income from other games and that Eve is a loss for them. As CCP said, their usual angle is credit card fraud and hacking. I suspect many will give up on Eve due to the PLEX market and increase account banning.
In fact, that could account for some of the increase in PLEX creation that we've seen since operation RAGE or whatever it's called. People spending real money on ISK have discretionary funds. Whether that expense gets them 200m or 400m is really arbitrary. They are likely to spend it either way... and a risk-free option has stronger overall value (CCP just needs to make sure the risk is there).
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.20 00:38:00 -
[7]
Edited by: Nyota Sol on 20/08/2009 00:40:54
Originally by: Helena C
Yes but who is gonna pay $15 bucks just to get 250 mil? That's barely a well fitted BS. While using ISk to buy plexes at under 300mil is a great deal. It's not such a great deal paying real money for such little isk at the current market costs of most items.
Let me be clear on this point.
ALL THE SAME PEOPLE who would blow $15 to buy video game e-money would still spend it regardless of it being 250m or 300m. They can rationalize the in-game value from now to the end of eternity, but in the end these are people willing to spend real cash on in-game toys. It's shiny. It wouldn't honestly matter if it was a BS or a BC... they're going to spend it.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.20 17:25:00 -
[8]
Buy orders have come to dominate the plex market in the last 48-72 hours, with several regions having sub-300m plex prices (sell orders) for many hours at a time. Buy orders are in the 290-295m range. Averages will likely fall below 300m in the next 2 days, and then we'll see what happens.
Originally by: Akita T
Originally by: Nyota Sol Volume increasing. Prices flat. Supply increasing exponentially. Demand flat.
Not quite. The demand is not extremely elastic, and has a long delay between cause and effect, but the link is there. Once PLEX prices go down enough, you will see a significant increase in demand, which will remain there to some degree even after prices restart going up. Cycles, cycles, everything works in cycles... bubble, bust, repeat...
I was simply talking about the current conditions as quantified in those charts by CCP.
As for plex trends, I'd hesitate to make long-term generalizations about them or to use GTC as the basis of analysis. I do believe interest in using them for subscriptions may have a ceiling at current prices. I do believe that people would continue to create them at 200-250m regardless of all the rhetoric about the past.
I do not believe everything works in cycles toward equilibrium, however. I dont even think a simple supply/demand curve accurately applies to something like PLEX. It's complicated, like real currency dynamics. It involves overlapping types of demand and interests.
I do think we will see a growth in plex usage (the primary demand) with lower prices and i think that interest in creating them will remain strong (the secondary demand). I consider plex usage the primary demand, because there is only one means to do so and because it sets the real value of plex. |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.21 11:24:00 -
[9]
Edited by: Nyota Sol on 21/08/2009 11:25:01
Trading has been increasingly driven by Buy Orders, with Sell Orders being very stubborn. However, Buys in Sinq have been increasingly poking below 300 and now the same is happening in Jita.
Jita's daily averages have sunk below 300m.
Because 300 is such a strong psychological round number, my fascination with this increases and I wonder how long until we see a fairly sharp drop from the 290s.
That's Jita just before DT on the 21st.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.21 12:07:00 -
[10]
Originally by: Vaerah Vahrokha So, in the end, this was not a sort of "random report" but just your part in a market manipulation to instill FUD and have prices drop, right?
Yes, i'm "manipulating the market" by pointing out the obvious to anybody looking carefully at the facts in the devblog. Wow, you people need to get off your computers more often.
Sorry, but if i were "manipulating the market" i wouldn't be talking about this and would be simply buying out the Buy Orders and relisting them way lower in several regions. Oh wait, i don't have that kind of ISK.
Oh wait... and i said that the start THAT I'M INVESTED IN PLEX... so that would LOSE me even more money.
Please keep your tinfoil hats tilted at the sun...
CAS 101 Eve Musings |
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Nyota Sol
Center for Advanced Studies
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Posted - 2009.08.22 10:22:00 -
[11]
Originally by: Selene D'Celeste
While anecdotal evidence is fine and dandy, numerical evidence is better. For those who have been around a few years, there have been periods where a 30 D GTC was worth 100, 180, and now 300. Obviously this has gone up as more ISK is available to the average player, but just because we've seen GTCs sell at 300 doesn't mean no one would sell them again at 200. You do what the market allows you to do. If the overwhelming pressure crashes the market to 200 and demand < supply still holds, then it will stay there, and players will make that judgment call when they come to it. In short, we already know that a lower price is a sustainable level, purely due to historical data.
Good points. I am hesitant to use the past as a direct analogy for PLEX, because my understanding it that the PLEX represent a unique mix of both isk/cash and ingame sub markets. Likewise, with overall market changes and inflation, it's risky to rely on prices from years ago.
I believe that the level of PLEX usage will start to increase intensely as prices drop farther into the 200s. In spite of the immature personal attacks and claims that I'm engaging in "market manipulation" by having this discussion, I'm actually hoping prices lower gradually over a month and bottom out at 250m. With the incoming mineral price volatility, salvage/rig volatility and this plexapocalyps all going at the same time, i worry about the game market effectively crashing. Just a bit.
Originally by: Qi Teuf
I am one of those people that has money to spend on plexes, I happened to buy some at the right time when I came back to game and sold them for 400mil/PLEX. I would not however even think of buying PLEX at 200mil or lower.
The answer comes in my RL job and how much money I make an hour, compared to how much Isk I make in game and what it can buy. For me an easy 1.6Billion was nice to provide ships for PvP, but spending $ on only .6 Billion would not be worth the effort. There is a line at where it is more advantageous for me to Rat in 0.0 to earn Isk, than it is to sell PLEX at such a low price.
Now this may barely scratch the issue of the overall market, but your statement does not hold water for players like myself who purchase for other than market transactions.
I'd agree that there can be extremes where people would stop trading $ for ISK on the one hand, or on the other hand where people would start trading $ for ISK in much much higher volumes.
The bottom line is that you have RL time constraints and plex allow you to cash in RL work for game money. I'm saying most people with RL jobs and time constraints don't invest real $ for ISK. Similarly, I believe that what people say and what people do are not always the same.
If you could get 600m for plex and got used to that, I suspect you'd be saying you would NEVER buy plex at 300m. The perceived value is not entirely objective. We're talking about buying virtual toys.
I see the decision to spend $ for ISK on par with somebody having cash in their pocket and wanting to buy a new toy. They are going to buy a toy based on what they can afford. They may convince themselves that the decision making is some type of rational cost & value assessment, but what's driving the purchase is them having $ and wanting a toy. Whether they can afford a fancy new gaming computer or only a skateboard doesn't matter. They are spending what's burning in their pocket.
This is why i suspect people who buy ISK with cash would do so regardless of whether they get 600m ISK or 200m ISK. The temptation is obviously greater with more ISK and perceived value, but in the end we're talking about putting money into a game... regardless of what is "won" inside the game.
I might add that if prices dropped to 200m, this means more people could afford to make Eve pay for itself... and thus may feel like they "deserve" to spend real money on buying ISK.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.23 01:12:00 -
[12]
Originally by: Kinetic Wolf Edited by: Kinetic Wolf on 22/08/2009 17:23:08 lulz at speculators
btw today theres heavy undercutting on Jita 4-4. Im 99% sure someone is manipulating down, maybe to get a hundred of cheap PLEXes and then resell when prices go back to "regular" prices (320m).
Manipulating down?
Supplies doubled after speculators drove prices absurdly high. Buyers have been in complete control of the prices for several days now. It's not stopping, and now that more people are waking up and realizing the 300m days are gone... they will try to cut their losses...
I think the problem is that many people perceive PLEX to be primarily about isk-cash trade rather than about subscribing to eve. The core valuation seems to me to be about what people are interested in paying for a month of Eve... not what people think is a good $-to-isk value.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.23 13:53:00 -
[13]
Originally by: Steve Thomas the REAL demand is inelastic because not everyone bothers with mutiple accounts to the point that they need to fuel them with plex, and even then that tends to be offset by the people who would otherwise spend 100 or more a month on plex who buy them for themselves.
however the real supplie is elastic in that eventualy its not realy worth the bother to get more plex just to try to fuel whatever it is the person is trying to use plex topay for.
That doesnt seem very elastic to me. Either people have accounts they intend to keep going with PLEX or they do not. From what i've heard, the only cases where folks turn on/off accounts is when juggling research.
So, while i can imagine some instability in terms of people setting up alt accounts and then later deciding not to stick with it... I would assume plex USAGE is a fairly steady thing long-term.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.23 14:16:00 -
[14]
Originally by: Malcanis
Remembering also that ISK farmers were a large source of demand for PLEXes as well...
Really?
If that is true, it may explain the dip we see in plex usage. However, plex usage stabilized at pre-Rage levels. Perhaps that would have been a net growth in plex usage if they had been there still. Perhaps plx usage is growing and it isn't clear on the chart because of the Rage op.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.25 09:55:00 -
[15]
Looks like we've yet to see a massive panic with all the sub-300m prices. Sinq has flattened at 280m for now.
This is good.
Hopefully there's more resistance to dumping than I feared. On the flip side, perhaps more people are looking to use PLEX in the coming month(s).
Perhaps when we see the next charts, we'll see that red line increasing into September with both increased interest (post-Rage) and people turning in many of those PLEX (yellow line) rather than trying to sell them for isk.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
|
Posted - 2009.08.25 22:10:00 -
[16]
Originally by: Gypsio III
Originally by: Nyota Sol
Originally by: Malcanis
Remembering also that ISK farmers were a large source of demand for PLEXes as well...
Really?
It's no coincidence that after 22nd June all the nonsense farmer names disappeared from the GTC forum... or that the spike in PLEX-in-stock starts from mid-late June.
It may explain why plex usage went flat to some extend, but plex creation was clearly driven by speculation and a frenzy over plex as a raw trading commodity.
CAS 101 Eve Musings |
Nyota Sol
Center for Advanced Studies
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Posted - 2009.08.29 21:07:00 -
[17]
Has it bottomed out?
280-285 averages all around.
Looks like we've avoided the sub-300m panic for now, which is great.
I still think prices will drop again, unless there's a sudden jump in actual plex usage (or intention to use). But at least we havent seen a sharp dive to 225m and hundreds of billions of new cash in the markets (my real worry)!!!
CAS 101 Eve Musings |
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